MEMBERSHIP INTEREST PURCHASE AGREEMENT by and among PERCUSSION PETROLEUM MANAGEMENT II, LLC as Seller, PERCUSSION PETROLEUM OPERATING II, LLC as the Company, and CALLON PETROLEUM OPERATING COMPANY as Buyer and CALLON PETROLEUM COMPANY as Parent Dated...

Exhibit 10.1

Execution Version

MEMBERSHIP INTEREST PURCHASE AGREEMENT
by and among
PERCUSSION PETROLEUM MANAGEMENT II, LLC

as Seller,

PERCUSSION PETROLEUM OPERATING II, LLC

as the Company,

and

XXXXXX PETROLEUM OPERATING COMPANY
as Buyer

and

XXXXXX PETROLEUM COMPANY
as Parent

Dated as of May 3, 2023

TABLE OF CONTENTS


			Page
ARTICLE 1 DEFINITIONS			1
Section 1.1 Definitions			1
Section 1.2 Construction			23
ARTICLE 2 PURCHASE AND SALE TRANSACTION			24
Section 2.1 Purchase and Sale			24
Section 2.2 Purchase Price			24
Section 2.3 Effective Time; Proration of Costs and Revenues; Adjustment Amount			25
Section 2.4 Deposit; Escrow			29
Section 2.5 Closing Statement			29
Section 2.6 Closing			30
Section 2.7 Post-Closing Adjustment			30
Section 2.8 Joint Interest Audits			31
Section 2.9 Tax Treatment; Purchase Price Allocation			32
Section 2.10 Withholding Taxes			32
Section 2.11 Deliveries at Closing.			33
Section 2.12 Payoff of Credit Document Indebtedness.			35
Section 2.13 Cash Free; Indebtedness Free			35
Section 2.14 Commodity Price Earn-Out Payment			35
ARTICLE 3 TITLE MATTERS			36
Section 3.1 Independent Title Review			36
Section 3.2 Exclusive Rights and Obligations			42
ARTICLE 4 ENVIRONMENTAL MATTERS			42
Section 4.1 Examination Period			42
Section 4.2 Access to Oil & Gas Assets and Records			42
Section 4.3 Notice of Environmental Defects			43
Section 4.4 Cure of and Remedies for Environmental Defects			44
Section 4.5 Dispute			46
Section 4.6 Limitations on Environmental Defects			47
Section 4.7 Exclusive Rights and Obligations			47
ARTICLE 5 CASUALTY & CONDEMNATION			47
Section 5.1 Casualty and Condemnation			47
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF SELLER			48
Section 6.1 Organization			48
Section 6.2 Authority			48
Section 6.3 Enforceability			48
Section 6.4 Title to Target Interests			48
Section 6.5 No Violation or Breach			48
Section 6.6 Brokerage Arrangements			49
Section 6.7 Litigation			49


Section 6.8 Bankruptcy			49
Section 6.9 Securities Matters			49
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF THE COMPANY			50
Section 7.1 Organization			50
Section 7.2 Authority			50
Section 7.3 Enforceability			50
Section 7.4 Capitalization			50
Section 7.5 No Violation or Breach			51
Section 7.6 Consents; Preferential Rights			51
Section 7.7 Brokerage Arrangements			51
Section 7.8 Litigation			52
Section 7.9 Compliance with Laws			52
Section 7.10 Financial Statements			52
Section 7.11 No Company Material Adverse Effect; Absence of Changes			53
Section 7.12 Taxes			53
Section 7.13 Contracts			54
Section 7.14 Affiliate Arrangements			56
Section 7.15 Permits			57
Section 7.16 Environmental Matters			57
Section 7.17 Insurance			57
Section 7.18 Imbalances			58
Section 7.19 Non-Consent Operations			58
Section 7.20 Current Commitments			58
Section 7.21 Suspense Funds			58
Section 7.22 Payout Balances			58
Section 7.23 Royalties and Working Interest Payments			58
Section 7.24 Officers and Bank Accounts			58
Section 7.25 Employee Matters; Available Employees			58
Section 7.26 Bankruptcy			59
Section 7.27 Credit Support Obligations			59
Section 7.28 Leases			59
Section 7.29 Casualty; Condemnation			59
Section 7.30 Xxxxx			59
Section 7.31 Payments for Production			59
Section 7.32 Special Warranty of Defensible Title			60
Section 7.33 Equipment			60
Section 7.34 Surface Interests			60
Section 7.35 Cyber Security and Privacy			60
ARTICLE 8 REPRESENTATIONS AND WARRANTIES OF THE BUYER PARTIES			60
Section 8.1 Organization			60
Section 8.2 Authority			60


Section 8.3 Enforceability			61
Section 8.4 No Violation or Breach			61
Section 8.5 Consents			61
Section 8.6 Litigation			61
Section 8.7 Bankruptcy			61
Section 8.8 Brokerage Arrangements			61
Section 8.9 Securities Matters			62
Section 8.10 Buyer’s Independent Investigation			62
Section 8.11 Funds			62
Section 8.12 Parent Common Stock			63
Section 8.13 Capitalization			63
Section 8.14 SEC Documents; Financial Statements			63
Section 8.15 Internal Controls; Listing Exchange			64
Section 8.16 Form S-3			64
Section 8.17 Investment Company			64
Section 8.18 Securities Laws			65
Section 8.19 Absence of Certain Changes			65
ARTICLE 9 ADDITIONAL AGREEMENTS AND COVENANTS			65
Section 9.1 Interim Covenants; Site Access			65
Section 9.2 Further Assurances			70
Section 9.3 Publicity			71
Section 9.4 Fees and Expenses			71
Section 9.5 Managers and Officers			72
Section 9.6 Post-Closing Access to Books and Records			73
Section 9.7 Employee Matters			73
Section 9.8 Insurance			74
Section 9.9 Credit Support			74
Section 9.10 Affiliate Arrangements; Resignations			74
Section 9.11 [Reserved]			75
Section 9.12 Amendment to the Schedules			75
Section 9.13 Company Releases.			75
Section 9.14 Cooperation Regarding Financial Information			76
Section 9.15 Hedging Contracts			77
Section 9.16 Change of Name			77
Section 9.17 Certain NYSE Matters			78
ARTICLE 10 INDEMNIFICATION; LIMITATIONS			78
Section 10.1 Indemnities of Seller			78
Section 10.2 Indemnities of Buyer			78
Section 10.3 Survival			79
Section 10.4 Limitations on Liability			79
Section 10.5 Exclusive Remedy			80

iii


Section 10.6 Indemnification Procedures			81
Section 10.7 Indemnification Payments			82
Section 10.8 Waiver of Consequential Damages			83
Section 10.9 Waiver of Right to Rescission			83
Section 10.10 Holdback			83
ARTICLE 11 TAX MATTERS			85
Section 11.1 Proration and Allocation of Taxes			85
Section 11.2 Transfer Taxes			86
Section 11.3 Tax Sharing Agreements			86
Section 11.4 Cooperation			86
Section 11.5 Certain Tax Refunds			86
ARTICLE 12 CONDITIONS TO CLOSING			87
Section 12.1 Conditions to the Obligations of Each Party			87
Section 12.2 Conditions to Obligations of Buyer			87
Section 12.3 Conditions to Obligations of Seller and the Company			87
Section 12.4 Frustration of Closing Conditions			88
ARTICLE 13 TERMINATION			88
Section 13.1 Termination			88
Section 13.2 Effect of Termination			90
Section 13.3 Specific Performance			92
ARTICLE 14 OTHER PROVISIONS			92
Section 14.1 Notices			92
Section 14.2 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial			93
Section 14.3 Entire Agreement; Amendments and Waivers			94
Section 14.4 Conflicting Provisions			94
Section 14.5 Binding Effect, Assignment and Third Party Beneficiaries			95
Section 14.6 Severability			95
Section 14.7 Interpretation			95
Section 14.8 Headings			95
Section 14.9 Counterparts			95
Section 14.10 No Recourse			95
Section 14.11 Disclaimer of Warranties and Representations			96
Section 14.12 Representation of Seller and the Company			98
Section 14.13 Schedules			99
Section 14.14 Time is of the Essence			99

LIST OF ANNEXES, EXHIBITS AND SCHEDULES

ANNEXES

Annex A-1 Leases

Annex A-2 Xxxxx

Annex A-3 Surface Interests

Annex A-4 Field Offices

EXHIBITS

Exhibit A Form of Seller Bring Down Certificate

Exhibit B Form of Assignment of the Target Interests

Exhibit C Form of Buyer Bring Down Certificate

Exhibit D Cash Escrow Agreement

Exhibit E Form of Stock Escrow Agreement

Exhibit F Form of Registration Rights Agreement

Exhibit G Form of Transition Services Agreement

SCHEDULES

Schedule CD Credit Documents

Schedule EQ Specified Inventory

Schedule PE Permitted Encumbrances

Schedule SI Subject Interval

Schedule 6.5 No Violation or Breach of Seller

Schedule 6.6 Brokerage Arrangements

Schedule 7.5 No Violation or Breach of the Company

Schedule 7.6 Consents; Preferential Rights

Schedule 7.7 Brokerage Arrangements

Schedule 7.8 Litigation

Schedule 7.9 Compliance with Laws

Schedule 7.10(a) Financial Statements

Schedule 7.10(b) Financial Statement Adjustments

Schedule 7.10(c) Liabilities

Schedule 7.11(b) Absence of Changes

Schedule 7.12 Taxes

Schedule 7.13(a) Material Contracts

Schedule 7.13(b) Contractual Obligations

Schedule 7.13(c) Material Contract Defaults

Schedule 7.13(d) Material Contract Terminations

Schedule 7.13(f) Hedge Contracts

Schedule 7.14 Affiliate Arrangements

Schedule 7.15 Permits

Schedule 7.16 Environmental Matters

Schedule 7.17 Insurance

Schedule 7.18 Imbalances

Schedule 7.19 Non-Consent Operations

Schedule 7.20 Current Commitments

Schedule 7.21 Suspense Funds

Schedule 7.22 Payout Balances

Schedule 7.23 Royalties and Working Interest Payments

Schedule 7.24 Officers and Bank Accounts

Schedule 7.28 Leases

Schedule 7.30 Xxxxx

Schedule 7.31 Payments for Production

Schedule 7.34 Surface Interests

Schedule 9.1 Interim Operations

Schedule 9.7 Available Employees

Schedule 9.9 Credit Support

Schedule 9.15 Specified Xxxxxx

Schedule 11.5 Certain Tax Refund Matters

MEMBERSHIP INTEREST PURCHASE AGREEMENT

THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Agreement”), dated as of May 3, 2023 (the “Execution Date”), is by and among Percussion Petroleum Management II, LLC, a Delaware limited liability company (“Seller”), Percussion Petroleum Operating II, LLC, a Delaware limited liability company (the “Company”), Xxxxxx Petroleum Operating Company, a Delaware corporation (“Buyer”), and Xxxxxx Petroleum Company, a Delaware corporation (“Parent” and together with Buyer, collectively, the “Buyer Parties” and each, a “Buyer Party”). Seller, the Company, Buyer and Parent are each sometimes referred to in this Agreement as a “Party” and collectively as the “Parties.”

WHEREAS, Seller owns all of the issued and outstanding equity interests of the Company (the “Target Interests”); and

WHEREAS, effective as of the Closing and on the terms and conditions set forth in this Agreement, Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, all of the Target Interests.

NOW, THEREFORE, in consideration of the premises and of the mutual promises, representations, warranties, covenants, conditions and agreements contained in this Agreement, and for other valuable consideration, the receipt and sufficiency of which is acknowledged, the Parties agree as follows:

ARTICLE 1
DEFINITIONS

Section 1.1 Definitions. The terms defined in this Section 1.1 shall have the meanings set forth below for all purposes under this Agreement.

“Accounting Firm” is defined in Section 2.7(b).

“Acquisition Engagement” is defined in Section 14.12(a).

“Action” means any action, cause of action, claim, demand, litigation, suit, citation, summons, subpoena, hearing, arbitration or other similar proceeding of any nature, civil, criminal, regulatory, administrative or otherwise, whether in equity or at law, in contract, in tort or otherwise.

“Adjustment Amount” means the resulting calculation (which may result in a positive (+) number or negative (–) number) of the amounts set forth in Section 2.3(b)(i) and Section 2.3(b)(ii).

“Adjustment Securities” is defined in Section 2.3(c).

“AFE” means any authorization for expenditure or other capital proposal to conduct operations relating to the Oil & Gas Assets.

“Affiliate” when used with respect to any Person means any other Person that, directly or indirectly, through one or more intermediaries, Controls, is controlled by, or is under common Control with, such Person in question; provided, however, for the purposes of this Agreement, the term “Affiliate” shall not include, and no provisions of this Agreement (but other than (a) as a member of the Seller Indemnified Parties for the purposes of receiving the benefit of indemnity hereunder and any waivers or releases made by Seller pursuant to the express terms of this Agreement, (b) as a Party Affiliate of Seller hereunder pursuant to Section 14.10 and, (c) Section 9.3) shall be applicable to, Carnelian Energy Capital Management, L.P. (“Carnelian”), Old Ironsides Energy Fund III-A, LP (“OIE III-A”) or Old Ironsides Fund III-B, LP (“OIE III-B” and together with OIE III-A, the “OIE Funds”), and, in each case, any fund managed thereby or any Person that directly or indirectly Controls, is Controlled by, or is under common Control therewith, other than Seller, Seller Parent and any Person controlled by Seller or Seller Parent.

For purposes of this Agreement, prior to Closing, the Company shall be considered an Affiliate of Seller, and from and after the Closing, the Company shall be considered an Affiliate of Buyer.

“Affiliate Arrangements” is defined in Section 7.14.

“Aggregate Excluded Hedge Termination Value” is defined in Section 9.15.

“Agreement” is defined in the Preamble.

“Allocated Value” is defined in Section 3.1(c).

“Allocation” is defined in Section 2.9.

“Allocation Dispute Resolution Period” is defined in Section 2.9.

“Annual Financial Statements” is defined in Section 7.10(a).

“Applicable AFE” means any AFEs received by the Company in writing or which the Company has delivered to Third Parties that (a) relate to (i) the Oil & Gas Assets and to drilling, reworking or conducting another operation with respect to a Well or (ii) the construction, expansion or maintenance of any production, gathering, storage or transportation assets, and (b) are not expired and for which all of the activities anticipated in such AFEs have not been completed by the Effective Time.

“Applicable Limitation Date” is defined in Section 10.3.

“Asset Taxes” means ad valorem, property, excise, severance, production, sales, use or similar Taxes based upon the acquisition, operation or ownership of the Oil & Gas Assets or the production of Hydrocarbons therefrom or the receipt of proceeds therefrom, excluding, for the avoidance of doubt, Income Taxes and Transfer Taxes.

“Assumed Xxxxxx” means those Hedge Contracts described on Schedule 7.13(f).

“Available Employee” is defined in Section 9.7(a).

“Balance Sheet Date” is defined in Section 7.11(a).

“Bank Accounts” is defined in Section 7.24.

“Base Purchase Price” is defined in Section 2.2(a).

“Beneficial Ownership Adjustment” is defined in Section 2.2(d).

“Beneficial Ownership Limitation” means 9.99% of the shares of Parent Common Stock outstanding immediately after giving effect to the issuance of the Stock Consideration.

“Beneficially Own” has the meaning assigned to such term in Rule 13d-3 under the Exchange Act, and any Person’s beneficial ownership of securities shall be calculated in accordance with the provisions of such Rule.

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized or required by applicable Law to be closed in Houston, Texas.

“Buyer” is defined in the Preamble.

“Buyer Fundamental Representations” means those representations and warranties of the Buyer Parties set forth in Section 8.1, Section 8.2, Section 8.3, Section 8.4(a), Section 8.7, Section 8.8, Section 8.12 and Section 8.13.

“Buyer Indemnified Parties” means Buyer, its Affiliates and all of its and their respective equityholders, partners, members, directors, officers, managers, employees, attorneys, agents and representatives.

“Buyer Parties’ Closing Documents” is defined in Section 8.2.

“Buyer Party” and “Buyer Parties” are defined in the Preamble.

“CARES Act” means the Coronavirus Aid, Relief, and Economic Security Act (including any changes in state or local Law that are analogous to provisions of the CARES Act or adopted to conform to the CARES Act) and any legislative, administrative or regulatory guidance issued pursuant thereto.

“Carnelian” has the meaning set forth in the definition of Affiliate.

“Cash and Cash Equivalents” at any time of determination and without duplication, means the aggregate amount of all cash and cash equivalents, in each case, determined in accordance with GAAP. “Cash and Cash Equivalents” shall include deposits in transit and be calculated net of check, drafts or wire transfers issued prior to the time of determination but not yet cleared.

“Cash Defect Escrow Account” is defined in Section 3.1(e)(i).

“Cash Escrow Agreement” means that certain Escrow Agreement by and among Seller, Buyer and the Escrow Agent, dated as of the Execution Date and attached to this Agreement as Exhibit D.

“Cash Indemnity Holdback Account” is defined in Section 10.10(a).

“Cash Purchase Price” is defined in Section 2.2(a)(i).

“Casualty Arbitrator” is defined in Section 5.1.

“Casualty Loss” is defined in Section 5.1.

“Chosen Courts” is defined in Section 14.2(b).

“Claim Deadline” is defined in Section 3.1(a).

“Claim Notice” is defined in Section 10.6(b).

“Closing” is defined in Section 2.6.

“Closing Date” is defined in Section 2.6.

“Closing Payment” means the remainder of (a) the Cash Purchase Price, adjusted as provided in Section 2.3, as determined pursuant to Section 2.5, less (b) the Deposit, less (c) the Defect Escrow Amount (to the extent satisfied with cash), if applicable, less (d) the Indemnity Holdback Cash.

“Closing Reference Price” means the Reference Price as of the Closing Date.

“Closing Statement” is defined in Section 2.5.

“Closing Stock Amount” means the number of shares of Parent Common Stock equal to the Stock Consideration as set forth in the Closing Statement (as adjusted, if applicable, by the Beneficial Ownership Adjustment and to account for the Defect Escrow Shares (if applicable) and the Indemnity Holdback Shares).

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

“Company” is defined in the Preamble.

“Company Contact” is defined in Section 9.1(d).

“Company Material Adverse Effect” means any circumstance, change, event, occurrence or condition that, individually or in the aggregate, (a) has or would reasonably be expected to have or cause a material adverse effect on or change in the business, operations, financial condition or results of operations of the Company, taken as a whole, as currently owned and operated as of the Execution Date or as would reasonably be expected to be owned or operated following the Execution Date or (b) materially and adversely affects, or would reasonably be expected to materially and adversely affect, the ability of Seller to consummate the transactions contemplated under this Agreement, except that none of the following will be deemed to constitute a Company Material Adverse Effect, or will be considered in determining whether a Company Material Adverse Effect has occurred: any adverse change, event, development, or effect (whether short-term or long-term) arising from or relating to: (i) changes that are the result of factors generally affecting the industries or markets in which the Company operates; (ii) any adverse change, effect or circumstance arising out of the announcement (intentional or otherwise) of the transactions contemplated by this Agreement, including the initiation of litigation or other administrative Proceedings by any Person with respect to this Agreement or any of the transactions contemplated by this Agreement; (iii) changes in Law or GAAP or the interpretation of such Law or GAAP on or following the Execution Date and any restriction imposed by a Governmental Authority; (iv) any failure of the Company to achieve any periodic earnings, revenue, expense, sales or other estimated projection, forecast or budget prior to the Closing (provided, that the underlying cause of any such failure to achieve any periodic earnings, revenue, expense, sales or other estimated projection, forecast or budget may be considered in determining whether a Company Material Adverse Effect has occurred); (v) changes that are the result of economic factors affecting the national, regional or world economy or financial markets; (vi) any change in the financial, banking, or securities markets; (vii) any earthquake, hurricane, tsunami, tornado, flood, mudslide, wildfire, or other natural disaster or act of god, and other force majeure event; (viii) any national or international political or social conditions in any jurisdiction in which the Company conducts business; (ix) the engagement by the United States in hostilities or the escalation of hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence or the escalation of any military or terrorist attack upon the United States, or any United States territories, possessions or diplomatic or consular offices or upon any United States military installation, equipment or personnel; (x) any consequences arising from any action by a Party expressly required by this Agreement; (xi) changes in prices for oil and gas or other commodities, goods, or services; (xii) the availability, liquidity or costs of xxxxxx; (xiii) casualty losses or any reclassification or recalculation of reserves in the ordinary course of business; (xiv) natural declines in well performance; (xv) the outbreak or continuation of or any escalation or worsening of any epidemic, pandemic or disease (including the COVID-19 pandemic), or any Law, directive, pronouncement or guideline issued by a Governmental Authority, the Centers for Disease Control and Prevention, the World Health Organization or industry group providing for business closures, “sheltering-in-place” or other restrictions that relate to, or arise out of, an epidemic, pandemic or disease outbreak (including COVID-19 Measures) or any change in such Law, directive, pronouncement or guideline or interpretation of such Law, directive, pronouncement or guideline following the Execution Date; or (xvi) any consequences to the extent arising from any action taken (or omitted to be taken) by Seller or the Company at the express written request of or with the express written consent of Buyer or its Affiliates after the Execution Date; provided that with respect to a matter described in clauses (i), (iii), (v), (vi), and (viii) above, such event, change, occurrence or effect may be taken into account in determining whether there has been a Company Material Adverse Effect only to the extent such event, change, occurrence or effect has a materially disproportionate adverse effect on the Company as compared to similarly situated participants in the industry in which the Company operates.

“Company Released Claims” is defined in Section 9.13(a).

“Company Releasing Parties” is defined in Section 9.13(a).

“Concurrent Agreement” means that certain Membership Interest Purchase Agreement dated as of the Execution Date, among Xxxxxx Petroleum Operating Company, as seller, Xxxxxx (Eagle Ford) LLC, as the company, and Ridgemar Energy Operating, LLC, as buyer.

“Confidentiality Agreement” means that certain Confidentiality Agreement, dated as of June 1, 2022, by and between Seller Parent and Xxxxxx Petroleum Operating Company.

“Continuing Employee” is defined in Section 9.7(a).

“Contracts” means all contracts, agreements, indentures, commitments, licenses, consensual obligations, arrangements, permits, promises, or understandings, whether written or oral, excluding (in each case) the Leases and any other instruments comprising or constituting the chain of title to real property.

“Control” (including its derivatives and similar terms) means possessing, directly or indirectly, the power to direct or cause the direction of the management and policies of any such relevant Person by ownership of voting interest, by contract or otherwise.

“Cooperation Period” is defined in Section 9.14(a).

“COVID-19” means SARS-CoV-2 or COVID-19, and any evolutions of COVID-19 or related or associated epidemics, pandemic or disease outbreaks.

“COVID-19 Measures” means any action or inactions taken (or not taken), or plans, procedures or practices adopted (and compliance with such plans, procedures or practices), in each case, in connection with or in respect to any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester or any other Law, order, directive, guidelines or recommendations by any Governmental Authority (including the Centers for Disease Control and Prevention and the World Health Organization) in connection with or in response to COVID-19, including the Coronavirus Aid, Relief, and Economic Security Act (CARES) or the Coronavirus Response and Relief Supplemental Appropriations Act of 2021.

“Credit Document Indebtedness” means, as of any determination time, the Indebtedness incurred and outstanding pursuant to the Credit Documents as of such time, including any and all amounts necessary and sufficient to retire such Indebtedness, including principal (including the current portion thereof) and/or scheduled payments, accrued interest or finance charges, and other fees, penalties or payments (prepayment or otherwise).

“Credit Documents” means those agreements and other documents identified on Schedule CD, and any amendments, extensions, supplements or replacements of any of the Credit Documents or substitute facilities thereof.

“Credit Support” means any cash deposits, guarantees, letters of credit, treasury securities, surety bonds and other forms of credit assurances or credit support.

“Cure Deadline” is defined in Section 3.1(e).

“D&O Provisions” is defined in Section 9.5(a).

“Defect Escrow Amount” means any amounts deposited in the Cash Defect Escrow Account pursuant to Section 3.1(e)(i), Section 3.1(h) or Section 4.5, if any.

“Defect Escrow Shares” means the aggregate of all Title Escrow Shares and Environmental Escrow Shares delivered to the Transfer Agent at Closing pursuant to Section 3.1(e)(i), Section 3.1(h), Section 4.4 or Section 4.5, if any.

“Defensible Title” means such title as to the applicable Subject Interval for each Lease or Well, that, as of the Effective Time and the Closing Date and subject to Permitted Encumbrances, is (x) deducible of record or (y) in the case of contractual interests held pursuant to joint operating agreements, pooling agreements, pooling orders or unitization agreements, beneficial title evidenced by written

elections or unrecorded instruments, or that is otherwise reasonably likely to be successfully defended if challenged, and, in each case:

(a) with respect only to the applicable Subject Interval of each Lease set forth on Annex A-1 or Well set forth on Annex A-2, entitles the Company to receive not less than the Net Revenue Interest share set forth on (x) Annex A-1 for such Lease or (y) Annex A-2 for such Well, as applicable, of all Hydrocarbons produced, saved and marketed from such Lease or Well, throughout the productive life of such Lease or Well, except for (i) any decrease caused by orders of the applicable Governmental Authority having jurisdiction that are promulgated after the Effective Time that concern pooling, unitization, communitization or spacing matters or otherwise resulting from the establishment or amendment of pools or units from and after the Effective Time (if and to the extent permitted by this Agreement); (ii) any decreases resulting from the reversion of interests to co-owners with operations in which such co-owners, after the Effective Time, elected not to consent; (iii) any decreases required to allow other working interest owners to make up past underproduction or pipelines to make up past underdeliveries; or (iv) any decreases caused by any operations where the Company may be a non-consenting co-owner after the Execution Date (if and to the extent permitted by this Agreement);

(b) with respect only to the applicable Subject Interval of each Lease set forth on Annex A-1 or Well set forth on Annex A-2, obligates the Company to bear (or pay) no more than its Working Interest share set forth on (x) Annex A-1 for such Lease or (y) Annex A-2 for such Well, as applicable, of the costs and expenses for the maintenance and development of, and operations relating to such Lease or Well throughout the productive life of such Lease or Well, except for any increase: (i) caused by orders of the applicable Governmental Authority having jurisdiction that are promulgated after the Effective Time that concern pooling, unitization, communitization or spacing matters; (ii) caused by contribution requirements with respect to defaults or non-consent elections by co-owners under the applicable operating agreement after the Effective Time; or (iii) with at least a proportionate increase in the Company’s Net Revenue Interest with respect to the Subject Interval for such Lease or Well;

(c) with respect only to the applicable Subject Interval of each Lease listed in Annex A-1, entitles the Company to a number of Net Acres in and to such Lease (or portion thereof) not less than the number of Net Acres set forth therefor on Annex A-1; and

(d) is free and clear of all Liens.

“Deposit” is defined in Section 2.4.

“Dispute Notice” is defined in Section 2.7(b).

“Effective Time” means 12:01 a.m. local time where the Oil & Gas Assets are located on January 1, 2023.

“Employee Benefit Plan” means any (a) “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) or (b) other compensatory or health or welfare benefit plan or agreement, in each case that is sponsored, maintained or contributed to by Seller or any of its Affiliates for the benefit of any Available Employee.

“Environmental Arbitrator” is defined in Section 4.5.

“Environmental Condition” means any environmental condition existing on the Claim Deadline affecting or relating to an individual Oil & Gas Asset or the operation thereof that constitutes a current violation of or non-compliance with an Environmental Law or that presently requires remedial or corrective action under Environmental Law, other than any condition disclosed on Schedule 7.16 as of the Execution Date. For the avoidance of doubt: (a) the fact that a Well is no longer capable of producing sufficient quantities of oil or gas to continue to be classified as a “producing well” or that such a Well should be temporarily abandoned or permanently plugged and abandoned, in each case, shall not form the basis of an Environmental Condition; (b) the fact that a pipe is temporarily not in use shall not form the basis of an Environmental Condition; (c) all Losses for plugging, decommissioning, removal of equipment, abandonment and restoration obligations of the Oil & Gas Assets that arise by contract, lease

terms, Environmental Laws or requested by any Governmental Authority shall not form the basis of an Environmental Condition (except to the extent such Losses or obligations represent or arise from a violation of or noncompliance with Environmental Law); (d) any condition, contamination or Loss related to NORM, asbestos or asbestos containing materials shall not form the basis of an Environmental Condition (except to the extent such Losses or obligations represent or arise from a violation of or noncompliance with Environmental Law); and (e) except with respect to personal property: (i) that causes or has caused contamination of soil, surface water or groundwater which is a current violation of Environmental Law; or (ii) the use or condition of which is a current violation of, or remedial or corrective action is otherwise presently required under, Environmental Law, the physical condition of any surface or subsurface personal property, including water or oil tanks, separators or other ancillary equipment, shall not form the basis of an Environmental Condition.

“Environmental Deductible Amount” means an amount equal to $8,400,000.

“Environmental Defect” means any Environmental Condition discovered by Buyer or its Representatives and validly and timely asserted in an Environmental Defect Notice pursuant to Section 4.3.

“Environmental Defect Amount” with respect to an Environmental Defect, the Lowest Cost Response of such Environmental Defect (net to the Company’s interest in the applicable Oil & Gas Assets).

“Environmental Defect Notice” is defined in Section 4.3(a).

“Environmental Defect Property” is defined in Section 4.3(b)(ii).

“Environmental Escrow Amount” is defined in Section 4.4(a)(i).

“Environmental Escrow Shares” is defined in Section 4.4(a)(i).

“Environmental Laws” means all applicable federal, state, and local Laws in effect as of the Execution Date relating to pollution or the protection of the environment or worker health or safety (solely to the extent relating to exposure to Hazardous Materials), including those Laws relating to the generation, handling, use, processing, treatment, storage, transportation and disposal of Hazardous Materials. Notwithstanding anything in this Agreement to the contrary, the term “Environmental Laws” does not include: (a) prudent, good or desirable operating practices, policies, statements or standards that may be voluntarily employed or adopted by other oil and gas well operators or recommended, but not required by a Governmental Authority to the extent the same are not otherwise Laws; or (b) the Occupational Safety and Health Act of 1970, 29 U.S.C. § 651 et seq., as amended, or any other Law governing worker safety or workplace conditions.

“Environmental Liabilities” means all Losses (including remedial, removal, response, clean-up, investigation or monitoring costs), consulting fees, orphan share, prejudgment and post-judgment interest, court costs, and other damages incurred or imposed in connection with, or resulting from or attributable to: (a) any actual release of Hazardous Materials into the environment or resulting from or attributable to exposure to Hazardous Materials; (b) the generation, manufacture, processing, distribution, use, treatment, storage, release, transport or handling of Hazardous Materials; or (c) any other matter, condition or circumstance concerning Environmental Laws, Environmental Permits or the violation of or remediation under such Environmental Laws or Environmental Permits.

“Environmental Permit” means any Permit required by Environmental Laws.

“Environmental Threshold Amount” is defined in Section 4.6(a).

“Equipment” means any wellhead equipment, flowlines, pipelines, compression equipment, injection facilities, saltwater disposal facilities, and other equipment, fixtures or machinery of any kind or character that is used or held for use by the Company in connection with the ownership or operation of

the Oil & Gas Assets or otherwise in connection with the business of the Company, and further including (a) tanks, boilers, tubing, pumps, motors, flowlines, separators, fixtures, machinery, compression equipment, structures, radio and telephone equipment, SCADA and measurement technology (and smartphones, tablets and other mobility devices used in connection therewith), well communication devices and other materials and personal property used in connection with the ownership or operation of the other Oil & Gas Assets and (b) subject to Section 9.1(h), the inventory, equipment and spare parts described on Schedule EQ (the “Specified Inventory”).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

“Escrow Account” is defined in Section 2.4.

“Escrow Agent” means X.X. Xxxxxx Xxxxx Bank, N.A.

“Escrow Claim Notice” is defined in Section 10.10(a)(i).

“Examination Period” is defined in Section 3.1(a).

“Excess Amount” is defined in Section 2.7(d).

“Excess Principal Adjustment Amount” means an amount equal to the greater of (a) zero and (b) the remainder of (i) the principal amount of the Credit Document Indebtedness as of the Closing Date less (ii) $220,000,000.

“Exchange Act” means the Securities Exchange Act of 1934.

“Excluded Hedge” is defined in Section 9.15.

“Execution Date” is defined in the Preamble.

“Final Indemnity Holdback Release Time” is defined in Section 10.10(a)(iv).

“Final Purchase Price” means the Base Purchase Price plus the Adjustment Amount, if any, as finally determined pursuant to Section 2.7.

“Financial Statements” is defined in Section 7.10(a).

“Fraud” when used with respect to any Party means an actual, intentional and knowing material misrepresentation with respect to any representation or warranty set forth in Article 6, Article 7 and Article 8 (as applicable and in each case as qualified by the Schedules to this Agreement) or in the certificate delivered pursuant to Section 2.11(a)(i) or Section 2.11(b)(i), in each case, on which the other Party to this Agreement justifiably relies to its detriment and as a result of such reliance suffers damages. Notwithstanding the foregoing, (a) such actual and intentional Fraud shall only be deemed to exist if such first Party, in each case had: (i) actual knowledge (as opposed to imputed or constructive knowledge) as of the Execution Date that such representation and warranty (as qualified by the Schedules to this Agreement) was false when made; and (ii) the actual and specific intent to deceive and mislead a party to this Agreement and to receive a benefit from such deception and misleading, and (b) “Fraud” does not include constructive fraud or other claims based upon constructive knowledge, negligent misrepresentation, recklessness, or other similar theories.

“GAAP” means accounting principles generally accepted in the United States as in effect from time to time.

“Xxxxxx” is defined in Section 14.12.

“Governing Documents” means the documents by which any Person (other than an individual) establishes its legal existence or that govern its internal affairs, including: (a) the articles or certificate of incorporation and the bylaws of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (d) the certificate of formation and the limited liability company agreement or, if applicable, operating agreement of a limited liability company; (e) any similar charter or operating document adopted or filed in connection with the creation, formation or organization of a Person; and (f) any amendment, modification, restatement, supplement, certificate of designations or similar to any of the foregoing.

“Governmental Approval” means any consent, certification, exemption or variance of, to, by or with, any Governmental Authority pertaining to the consummation of the transactions contemplated by this Agreement.

“Governmental Authority” means any legislature, court, tribunal, arbitrator, authority, agency, department, commission, division, board, bureau, branch, official or other instrumentality of the U.S., or any domestic state, county, city, tribal or other political subdivision, governmental department or similar governing entity, and including any governmental, quasi-governmental, regulatory, administrative or non-governmental body exercising similar powers of authority.

“Hazardous Materials” means any material, substance or waste, whether solid, liquid, or gaseous which is regulated as a “hazardous material,” “hazardous waste,” “hazardous substance,” “toxic substance,” “pollutant,” or “contaminant,” or otherwise classified as hazardous or toxic, in or pursuant to any Environmental Law due to its dangerous or deleterious properties or characteristics, including Hydrocarbons, but excluding naturally occurring radioactive materials and asbestos or asbestos-containing materials.

“Hedge Adjustment Amount” means, to the extent incurred and paid by Seller, its Affiliates or the Company during the period of time from the Effective Time until Closing, an aggregate amount equal to (a) the amount of all monthly hedge settlements paid with respect to the Assumed Xxxxxx plus (b) the amount of all unwind costs paid with respect to the Assumed Xxxxxx, including any liquidation and/or termination fees or payments payable upon the liquidation or termination of the same, in each case without offset or netting of any amounts with the counterparty thereto less (c) the amount of all net payments received with respect to the Assumed Xxxxxx, including net payments received as a result of the termination or unwinding of such Assumed Xxxxxx.

“Hedge Contracts” means any forward, futures, swap, collar, put, call, floor, cap, option or other similar Contract (excluding, for the avoidance of doubt, any physically settled Contract, including index, fixed price or physical basis transactions) to which the Company, Seller, or any of their respective Affiliates is a party that is intended to benefit from or reduce or eliminate the risk of fluctuations in the price of commodities, including any Hydrocarbons or other commodities, currencies, interest rates and indices, and any financial transmission rights and auction revenue rights.

“Hedge Providers” is defined in Section 9.15.

“Hedge Termination Value” is defined in Section 9.15.

“Hydrocarbons” means oil, gas, minerals, and other gaseous and liquid hydrocarbons, or any combination of the foregoing, produced from and attributable to the Oil & Gas Assets.

“Imbalance” means any imbalance at the: (a) wellhead between the amount of Hydrocarbons produced from a Well and allocable to the interests of the Company and the shares of production from the relevant Well to which the Company is entitled; or (b) pipeline flange between the amount of Hydrocarbons nominated by or allocated to the Company and the Hydrocarbons actually delivered on behalf of the Company at that point.

“Imbalance Amount” means, as determined separately for gaseous Hydrocarbons (excluding natural gas liquids), liquid Hydrocarbon (excluding natural gas liquids), and natural gas liquids, the

contract price for such product in effect as of the Effective Time (or sales price, if there is not a contract price in effect as of the Effective Time).

“Income Taxes” means income, capital gain, franchise, branch, and similar Taxes based upon, measured by or calculated with respect to gross or net income, profits, capital or similar measures (or multiple bases, including corporate, franchise, business and occupation, business license or similar Taxes, if income, profits, capital or a similar measure is one of the bases on which such Tax is based, measured or calculated).

“Indebtedness ” means (without duplication): (a) all indebtedness of the Company for borrowed money or indebtedness issued or incurred by the Company in substitution or exchange for indebtedness for borrowed money; (b) indebtedness of the type described in the other clauses of this definition that is guaranteed, directly or indirectly, in any manner by the Company or for which the Company may be liable, but excluding endorsements of checks and other similar instruments in the ordinary course of business; (c) interest expense accrued but unpaid on or relating to any such indebtedness described in the other clauses of this definition; (d) indebtedness evidenced by any note, bond, debenture or other debt security; and (e) obligations of the Company to pay the deferred purchase or acquisition price for any Oil & Gas Asset, including any earn out liabilities associated with past acquisition. For purposes of the determination of the Adjustment Amount, Indebtedness shall also include any and all amounts necessary and sufficient to retire such Indebtedness, including principal (including current portion thereof) and/or scheduled payments, accrued interest or finance charges, and other fees, penalties or payments (prepayment or otherwise) necessary and sufficient to retire such Indebtedness at or in connection with Closing. Notwithstanding anything to the contrary herein, Indebtedness shall not include (i) any Transaction Expenses, (ii) any obligations under the Assumed Xxxxxx, (iii) any Indebtedness incurred by Buyer or its Affiliates on the Closing Date or (iv) without limiting Seller’s obligations under Section 2.14, any obligations of the Company under Section 2.6 of the Oasis PSA.

“Indemnified Party” is defined in Section 10.6(a).

“Indemnify” means indemnify, defend (including the requirement to pay reasonable, documented costs of litigation, dispute resolution and other legal costs and court fees) and hold harmless.

“Indemnifying Party” is defined in Section 10.6(a).

“Indemnity Deductible” is defined in Section 10.4(a).

“Indemnity Holdback Accounts” is defined in Section 10.10(a).

“Indemnity Holdback Amount” is defined in Section 10.10(a).

“Indemnity Holdback Cash” is defined in Section 10.10(a).

“Indemnity Holdback Disbursement” is defined in Section 10.10(a)(ii).

“Indemnity Holdback Shares” is defined in Section 10.10(a).

“Indemnity Threshold” is defined in Section 10.4(a).

“Independent Environmental Review” is defined in Section 4.1.

“Independent Title Review” is defined in Section 3.1(a).

“Initial Indemnity Holdback Release Time” is defined in Section 10.10(a)(iv).

“Interest Payment Adjustment Amount” means to the extent accrued from and after the Effective Time, an amount equal to all interest, fees, costs, expenses or other similar amounts attributable to any

Credit Document Indebtedness paid by Seller, its Affiliates or the Company during the period from and after the Effective Time until the Closing.

“Instruction Letter” is defined in Section 10.10(a)(ii).

“Interest Reduction” is defined in the definition of Permitted Encumbrances.

“Interim Financial Statements” is defined in Section 7.10(a).

“IRS” is defined in Section 2.9.

“Knowledge” means all facts actually known by individuals specified in clause (a) or (b) below, as the case may be, without independent investigation (and shall in no event encompass constructive, imputed or similar concepts of knowledge): (a) in the case of Seller or the Company, Xxxx Xxxxxxxx XXX (Co-Chief Executive Officer), Xxxxx Xxxxx (Co-Chief Executive Officer), Xxxxx Xxxxx (VP of Land & Legal), Xxxxxx Xxxx (VP of Accounting), Xxxxx XxXxxxxxxx (VP of Finance and Marketing), Xxxxx Xxxx (VP of Production) and Xxxxxx XxXxxxx (Chief Financial Officer); and (b) in the case of Buyer or Xxxxxx, Xxxxxx X. Xxxxx, Xx. (President, Chief Executive Officer, and Director), Xxxxx Xxxxxxx (Senior Vice President and Chief Financial Officer), Xxxx Xxxxxx, PhD (Senior Vice President and Chief Operating Officer), Xxxxxx X. Xxxxxxx (Senior Vice President, General Counsel and Corporate Secretary) and Xxxx Xxxxx (Vice President of Corporate Development and Land).

“Laws” means all federal, state and local statutes, laws, rules, regulations, codes, orders, ordinances, licenses, writs, injunctions, judgments, subpoenas, awards and decrees and other legally enforceable requirements enacted, adopted, issued or promulgated by any Governmental Authority.

“Leases” means all of the following in which the Company owns an interest: oil, gas and/or mineral leases; subleases and other leaseholds; carried interests; mineral fee interests; overriding royalty interests; reversionary rights; and other similar leasehold and mineral properties and interests, including those set forth on Annex A-1.

“Lien” means any mortgage, deed of trust, lien, charge, security interest, pledge or other similar encumbrance.

“Losses” means all losses, costs, liabilities, obligations, Taxes, expenses, fines, penalties, interest, expenditures, claims, awards, settlements, judgments, damages, reasonable and documented out-of-pocket attorneys’ fees and reasonable out-of-pocket expenses of investigating, defending and prosecuting litigation.

“Lowest Cost Response” means the response required or allowed under Environmental Laws that cures, resolves, addresses, removes or remedies the Environmental Defect alleged in an Environmental Defect Notice at the lowest out-of-pocket cost sufficient to comply with Environmental Laws as compared to any other response that is required or allowed under Environmental Laws and would have the effect of remedying such Environmental Defect. The Lowest Cost Response shall include taking no action, leaving the condition unaddressed, periodic monitoring or the recording of notices in lieu of remediation, in each case, if any such response is allowed under Environmental Laws with respect to the applicable Environmental Defect. The Lowest Cost Response shall not include: (a) the costs of Buyer’s or any of its Affiliate’s employees, project manager(s) or attorneys; (b) expenses for matters that are costs of doing business (e.g., those costs that would ordinarily be incurred in the day-to-day operations of the Oil & Gas Assets, or in connection with permit renewal/amendment activities); (c) overhead costs of Buyer or its Affiliates; (d) costs and expenses that would not have been required under Environmental Laws as they exist on the Execution Date; or (e) any costs or expenses relating to any obligations to plug, abandon or decommission xxxxx located on or comprising part of the Oil & Gas Assets or the assessment, remediation, removal, abatement, transportation, disposal, or any other corrective actions of any asbestos, asbestos-containing materials or NORM that may be present in or on the Oil & Gas Assets, to the extent not presently in violation of or requiring remediation under Environmental Laws.

“Material Contract” is defined in Section 7.13(a).

“Membership Interests” means, when used with respect to a Person, the membership interests, limited liability company interests, other equity interests, rights to profits or revenue and any other similar interest, and any Security or other interest convertible into the foregoing, or any right (contingent or otherwise) to acquire any of the foregoing, of such Person.

“Net Acre” means, as computed separately with respect to each Lease, (a) the number of gross acres in the lands covered by such Lease, multiplied by (b) the undivided percentage interest in oil, gas and other minerals covered by such Lease in such lands, multiplied by (c) the Company’s aggregate Working Interest or undivided interest in such Lease. Notwithstanding the foregoing sentence, if items (b) and/or (c) vary as to different areas, tracts or parcels of such lands (including depths) covered by such Lease, a separate calculation shall be done for each such area as if it were a separate Lease.

“Net Revenue Interest” means an interest (expressed as a percentage or decimal fraction) in and to all oil, gas and other Hydrocarbons produced, saved and sold from or allocated to a Lease or Well (limited to the Subject Interval for such Lease or Well and subject to any reservations, limitations or depth restrictions described on Annex A-1 or Annex A-2), net of Royalties.

“NORM” is defined in Section 14.11(c).

“Notice” has the meaning set forth in Section 14.1(a).

“Novation Agreements” means those ISDA Assumption, Transfer and Novation Agreements executed on or around Closing, among the Hedge Providers, the Replacement Hedge Providers, Seller Parent, and Buyer, in a form agreed to by the Parties, with such modifications as are required by Hedge Providers and the Replacement Hedge Providers, pursuant to which (a) all of Seller Parent’s rights and obligations under the Assumed Xxxxxx are assigned to Buyer, (b) all of the Hedge Providers’ rights and obligations under the Assumed Xxxxxx are assigned to the Replacement Hedge Providers and (c) all obligations of Seller Parent under the Assumed Xxxxxx are released.

“NYSE” means the New York Stock Exchange.

“Oasis PSA” that certain Purchase and Sale Agreement dated May 20, 2021, by and between Oasis Petroleum Permian LLC, a Delaware limited liability company, and the Company, as amended, modified, or supplemented from time to time prior to the Execution Date.

“OIE III-A” has the meaning set forth in the definition of Affiliate.

“OIE III-B” has the meaning set forth in the definition of Affiliate.

“OIE Funds” has the meaning set forth in the definition of Affiliate.

“Oil & Gas Assets” means, without duplication: (a) all Leases held by the Company, and all right, title and interest of the Company attributable or allocable by virtue of any and all pooling, unitization, communitization and operating agreements (including the Leases set forth on Annex A-1); (b) all Xxxxx of the Company (including the Xxxxx set forth on Annex A-2); (c) all rights and interests in, under or derived from all unitization and pooling agreements, declarations and orders in effect with respect to any of the Leases, Xxxxx and the units created (the oil and gas assets as described in clauses (a), (b) and (c), collectively, the “Oil & Gas Interests”); (d) all of the following in which the Company owns an interest, (i) all lands covered by or subject to the Oil & Gas Interests and all Royalties applicable to the Oil & Gas Interests and (ii) all rights with respect to the use and occupancy of the surface and subsurface depths under such lands, including all rights-of-way, surface fee rights, fee interests and other leases, reservations, crossing rights and other easements, servitudes, franchises, permits, licenses, condemnation judgments or awards, surface leases, surface use agreements, subsurface easements, subsurface use agreements and other rights to, or interests in, real property and other similar real property interests held by the Company, used or held for use in connection with the ownership, operation or maintenance of the Oil & Gas Assets, including those set forth on Annex A-3 (collectively, the “Surface Interests”); (e) all (i) office buildings, field offices and office leases (and any associated surface rights or interests), together with all fixtures appurtenant thereto and all Equipment and personal property located thereon and used in

connection with the exploration, development or operation of the Oil & Gas Interests or otherwise in connection with the business of the Company, including those set forth in Annex A-4, and (ii) other real and personal property located in or upon such lands and used in connection with the exploration, development or operation of the Oil & Gas Interests, in each case, in which the Company owns an interest; (f) all Contracts related to the Oil & Gas Interests, including any rights of the Company under any joint operating agreement, joint exploration agreement, farmin and farmout agreements, area of mutual interest agreement or similar agreement; (g) all Equipment; (h) the Hydrocarbons produced from or allocated to the Oil & Gas Interests from and after the Effective Time; (i) all Permits and (j) all motor vehicles, trailers, and similar rolling stock used or held for use in connection with, or related to, the Oil & Gas Assets.

“Oil & Gas Interests” has the meaning set forth in the definition of Oil & Gas Assets.

“Parent” is defined in the Preamble.

“Parent Common Stock” means the common stock, par value $0.01, of Parent.

“Parent Financial Statements” is defined in Section 8.14.

“Parent Material Adverse Effect” means any circumstance, change, event, occurrence or condition that, individually or in the aggregate, (a) has or would reasonably be expected to have or cause a material adverse effect on or change in the business, operations, financial condition or results of operations of Parent or Buyer, taken as a whole, or (b) materially and adversely affects, or would reasonably be expected to materially and adversely affect, the ability of Parent or Buyer to consummate the transactions contemplated under this Agreement, except that none of the following will be deemed to constitute a Parent Material Adverse Effect, or will be considered in determining whether a Parent Material Adverse Effect has occurred: any adverse change, event, development, or effect (whether short-term or long-term) arising from or relating to: (i) changes that are the result of factors generally affecting the industries or markets in which Parent or Buyer, as applicable, operates; (ii) any adverse change, effect or circumstance arising out of the announcement (intentional or otherwise) of the transactions contemplated by this Agreement, including the initiation of litigation or other administrative Proceedings by any Person with respect to this Agreement or any of the transactions contemplated by this Agreement; (iii) changes in Law or GAAP or the interpretation of such Law or GAAP on or following the Execution Date and any restriction imposed by a Governmental Authority; (iv) any failure of Parent or Buyer to achieve any periodic earnings, revenue, expense, sales or other estimated projection, forecast or budget prior to the Closing (provided, that the underlying cause of any such failure to achieve any periodic earnings, revenue, expense, sales or other estimated projection, forecast or budget may be considered in determining whether a Parent Material Adverse Effect has occurred); (v) changes that are the result of economic factors affecting the national, regional or world economy or financial markets; (vi) any change in the financial, banking, or securities markets; (vii) any earthquake, hurricane, tsunami, tornado, flood, mudslide, wildfire, or other natural disaster or act of god, and other force majeure event; (viii) any national or international political or social conditions in any jurisdiction in which Parent or Buyer (or any of their respective Subsidiaries), as applicable, conducts business; (ix) the engagement by the United States in hostilities or the escalation of hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence or the escalation of any military or terrorist attack upon the United States, or any United States territories, possessions or diplomatic or consular offices or upon any United States military installation, equipment or personnel; (x) any consequences arising from any action by a Party expressly required or expressly permitted by this Agreement; (xi) changes in prices for oil and gas or other commodities, goods, or services; (xii) the availability, liquidity or costs of xxxxxx; (xiii) casualty losses or any reclassification or recalculation of reserves in the ordinary course of business; (xiv) natural declines in well performance; (xv) the outbreak or continuation of or any escalation or worsening of any epidemic, pandemic or disease (including the COVID-19 pandemic), or any Law, directive, pronouncement or guideline issued by a Governmental Authority, the Centers for Disease Control and Prevention, the World Health Organization or industry group providing for business closures, “sheltering-in-place” or other restrictions that relate to, or arise out of, an epidemic, pandemic or disease outbreak (including COVID-19 Measures) or any change in such Law, directive, pronouncement or guideline or interpretation of such Law, directive, pronouncement or guideline following the Execution Date; or (xvi) any consequences to the extent arising from any action taken (or omitted to be taken) by Buyer or Parent

at the express written request of or with the express written consent of Seller or its Affiliates after the Execution Date; provided that with respect to a matter described in clauses (i), (iii), (v), (vi), and (viii) above, such event, change, occurrence or effect may be taken into account in determining whether there has been a Parent Material Adverse Effect only to the extent such event, change, occurrence or effect has a materially disproportionate adverse effect on Parent or Buyer as compared to similarly situated participants in the industry in which Parent or Buyer, as applicable, operates.

“Parent SEC Documents” is defined in Section 8.14.

“Party” and “Parties” are each defined in the Preamble.

“Party Affiliate” is defined in Section 14.10.

“Payoff Amount” is defined in Section 2.11(b)(x).

“Payoff Letters” is defined in Section 2.11(a)(viii).

“PC Statement Purchase Price” is defined in Section 2.7(a).

“Permit” means any license, authorization, lease, approval of lease assignment, notice, franchise, permit, designation, plan, certificate, approval, registration, conditions, or similar authorization necessary to own or operate the Oil & Gas Assets (in each case) from or with a Governmental Authority, other than the Leases.

“Permitted Encumbrances” means:

(a) lessor’s royalties, non-participating royalties, overriding royalties, production payments, carried interests, reversionary interests and other Royalties or similar burdens upon, measured by, or payable out of production which do not individually or in the aggregate (i) reduce the Company’s Net Revenue Interest below the amount shown on Annex A-2 for any listed Well, (ii) reduce the Company’s Net Revenue Interest in any Lease as to the applicable Subject Interval below the amount shown on Annex A-1 for such Lease, (iii) increase the Company’s Working Interest above the amount shown on Annex A-2 for any listed Well without at least a proportionate increase to the Company’s Net Revenue Interest for such Well, (iv) increase the Company’s Working Interest above the amount shown on Annex-1 for any listed Lease as to the applicable Subject Interval without at least a proportionate increase to the Company’s Net Revenue Interest for such Lease as to the applicable Subject Interval, or (v) reduce the Company’s Net Acres in any Lease as to the applicable Subject Interval below the amount shown on Annex A-1 for such Lease as to the applicable Subject Interval (each of clauses (i), (ii), (iii), (iv) and (v), an “Interest Reduction”);

(b) sales contracts covering oil, gas, or associated liquid or gaseous Hydrocarbons, except to the extent resulting in an Interest Reduction;

(c) preferential rights to purchase and required Third Party consents to assignment and similar rights that are (i) set forth on Schedule 7.6 or (ii) not applicable to the transactions contemplated by this Agreement except, in each case, to the extent pertaining to a prior breach of, or failure to comply with, the terms thereof by the Company or its successor in title to the Oil & Gas Asset(s) burdened thereby;

(d) all rights to consent by, required notices to, filings with, or other actions by any Governmental Authority in connection with the sale or conveyance of oil and gas leases or interests or sale of production therefrom if the same are customarily required or obtained subsequent to such sale or conveyance;

(e) liens for Taxes (i) that are not delinquent (including extensions) or (ii) which are being contested in good faith by appropriate proceedings and for which adequate reserves have been

made on the Financial Statements in accordance with GAAP and, if so contested, are identified on Schedule 7.12;

(f) easements, rights-of-way, servitudes, permits, surface leases, and other rights in respect of surface operations on or over any of the Oil & Gas Assets which do not, individually or in the aggregate, operate to (i) interfere, in any material respect, with operations on the Oil & Gas Assets for exploration and production of Hydrocarbons as currently conducted or reasonably expected to be conducted or (ii) result in an Interest Reduction;

(g) rights of a common owner of any interest currently held by the Company and such common owner as tenants in common or through common ownership, except to the extent resulting in an Interest Reduction;

(h) (i) Liens created under any lease, operating agreement or pooling order or similar agreement or by operation of Law relating to obligations not yet due and (ii) materialmen’s, mechanics’, repairmen’s, or other similar liens or charges arising by Law or under a Contract, in each case, with respect to which the underlying obligation (A) is not delinquent or (B) if delinquent, is otherwise being contested in good faith and is set forth on Schedule PE;

(i) the terms and provisions of Leases and Contracts (including any “free gas” arrangements under the Leases), as well as the terms and provisions of all assignments and conveyances of any of the Oil & Gas Assets to the Company, in such case, which do not individually or in the aggregate result in an Interest Reduction or interfere, in any material respect, with operations for exploration and production of Hydrocarbons form the Oil & Gas Assets as currently conducted or reasonably expected to be operated;

(j) all Liens or defects that are (i) fully and finally released at no cost or expense to Buyer or its Affiliates or (ii) waived in writing by Buyer, in each case, at or prior to Closing;

(k) except to the extent triggered on or prior to the Effective Time, conventional rights of reassignment obligating the Company to reassign its interest in any portion of the Leases to a Third Party;

(l) defects in the chain of title arising from (i) the failure to recite marital status, omissions of successors or heirship, or the lack of probate proceedings, (ii) lack of corporate or other entity authorization, (iii) failure to demonstrate of record proper authority for execution by a Person on behalf of a corporation, limited liability company, partnership, trust, or other entity or (iv) the lack of recorded powers of attorney from any Person to execute and deliver documents on their behalf, in each case, except to the extent such failure or omission has resulted, or is reasonably likely to result, in a Third Party’s actual and valid claim of superior title to the affected Oil & Gas Asset;

(m) all applicable Laws, and rights reserved to or vested in any Governmental Authority (i) to control or regulate any Oil & Gas Asset in any manner (excluding eminent domain or condemnation), (ii) by the terms of any right, power, franchise, grant, license or permit, or by any provision of Law, to terminate such right, power, franchise grant, license or permit or to purchase or recapture or to designate a purchaser of any of the Oil & Gas Assets, (iii) to use such property in a manner which does not materially impair the use of such property for the purposes of exploration and production of Hydrocarbons as currently used and (iv) to enforce any obligations or duties affecting the Oil & Gas Assets to any Governmental Authority, with respect to any franchise, grant, license or permit, in each case, except to the extent the same has resulted in an Interest Reduction prior to the Execution Date;

(n) zoning and planning ordinances and municipal regulations, in each case, except to the extent the same has resulted in an Interest Reduction prior to the Execution Date;

(o) the matters set forth on Schedule 7.8 as of the Execution Date;

(p) any matter specifically referenced on Annex A-1 or Annex A-2;

(q) defects based on failure to record Leases issued by any local, state or federal Governmental Authority, or any assignment of such Leases, in the real property, conveyance or other records of the county in which such property is located; provided that such Leases or conveyances are properly recorded or filed in the applicable recording index or files of such Governmental Authority, except where such recordation in the records of the applicable county is affirmatively required or absent reasonable evidence of an actual and valid claim of superior title from a Third Party to the affected Oil & Gas Asset;

(r) defects that have been cured by applicable Laws of limitation or prescription;

(s) with respect to any Leases or Xxxxx, a lack of title or defect in title solely to the extent relating to any depth or formation other than the Subject Interval for such Lease or Well;

(t) defects or irregularities resulting from or related to probate proceedings, which defects or irregularities have been outstanding for ten (10) years or more, absent a Third Party’s actual and valid claim of superior title to the affected Oil & Gas Asset;

(u) defects arising from prior oil and gas leases, Liens, production payments or mortgages relating to lands covered by any Leases that are not released or surrendered of record and that have expired on the face of the terms of such instrument or the enforcement of which is barred by applicable statute of limitations;

(v) failure to obtain waivers of maintenance of uniform interest, restriction on zone transfer or similar provisions in operating agreements with respect to assignments in the Company’s chain of title to the applicable Oil & Gas Asset unless there is an outstanding and pending, unresolved claim from a Third Party with respect to the failure to obtain such waiver;

(w) defects based solely on lack of information in Seller’s or the Company’s records;

(x) defects arising out of lack of a survey or lack of metes and bounds descriptions, unless a survey or metes and bounds description is expressly required by Law;

(y) defects arising from any change in applicable Law after the Execution Date;

(z) Imbalances;

(aa) defects based on or arising out of the failure of a Lease to hold after the Closing a specified number of net mineral acres after the primary term of such Lease has expired;

(bb) defects that affect only which Third Party royalty owner has the right to receive royalty payments rather than the amount or the proper payment of such royalty payment;

(cc) defects based on a gap in the chain of title in the applicable county records, unless such gap is shown to exist in such records by an abstract of title, title opinion or landman’s chain or run sheet which documents shall be included or referenced with reasonable specificity in the applicable Title Defect Notice;

(dd) defects resulting from a cessation of production, insufficient production, or failure to conduct operations on any of the Oil & Gas Interests held by production, or lands pooled, communitized or unitized with such Oil & Gas Interests, except to the extent the cessation of production, insufficient production or failure to conduct operations would reasonably be expected to give rise to a right to terminate the Oil & Gas Interest in question or result in the forfeiture of, or obligation to release, the affected leasehold acreage, which evidence shall be included or referenced with reasonably specificity in the applicable Title Defect Notice;

(ee) encumbrances created under deeds of trust, mortgages and similar instruments by the lessor or mineral owners under a Lease covering the lessor’s or mineral owner’s surface and mineral

interests in the land covered thereby to the extent (i) such encumbrances or obligations secured thereby have expired by their own terms or the enforcement of which is barred by applicable statutes of limitation or (ii) (A) such encumbrances do not contain express language that prohibits the lessors from entering into an oil and gas lease or otherwise invalidates an oil and gas lease and (B) no mortgagee or lienholder of any such encumbrance has, prior to the expiration of the Examination Period, initiated or threatened in writing foreclosure or similar proceedings against the interest of lessor in such Lease, nor has the Company received any written notice of lessor default under any such encumbrance;

(ff) defects based on Tax assessment, Tax payment or similar records;

(gg) defects based on or arising out of the failure of the Company or any Third Party to enter into, be party to, or be bound by, pooling provisions, a pooling agreement, declaration or order, production sharing agreement, production allocation agreement, production handling agreement, or other similar agreement with respect to any horizontal Well that crosses more than one Lease or tract, to the extent that (i) such Well has been permitted by the applicable Governmental Authority or (ii) the allocation of Hydrocarbons produced from such Well among such Leases or tracts is based upon the length of the “as drilled” horizontal wellbore open for production, take points, the total length of the horizontal wellbore, or other methodology that is intended to reasonably attribute to each such Lease or tract its share of such production; and

(hh) specifically excepting any matter that is specifically addressed by any other enumerated Permitted Encumbrance, all other encumbrances, contracts, agreements, instruments, encumbrances, obligations, defects, obligations and irregularities affecting the Company’s chain of title to the Oil & Gas Assets that would be accepted by a reasonably prudent purchaser engaged in the business of owning and operating oil and gas properties in the region where the Oil & Gas Assets are located, to the extent they do not, individually or in the aggregate, (i) result in an Interest Reduction or (ii) operate to interfere, in any material respect, with the operation of the Oil & Gas Assets subject thereto or affected thereby (as currently conducted or reasonably expected to be operated).

“Person” means any individual or entity, including any corporation, limited liability company, partnership (general or limited), joint venture, association, joint stock company, trust, unincorporated organization or Governmental Authority.

“Phase I Environmental Site Assessment” is defined in Section 4.2.

“Phase II Environmental Site Assessment” is defined in Section 4.2.

“Post-Closing Statement” is defined in Section 2.7(a).

“Post-Effective Time Tax Period” means any taxable period beginning after the Effective Time and the portion of any Straddle Period beginning on the day immediately following the date on which the Effective Time occurs.

“Pre-Effective Time Tax Period” means any taxable period ending before the Effective Time and the portion of any Straddle Period ending on the day on which the Effective Time occurs.

“Proceeding” means any threatened (in writing), pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative, or any appeal from such action, suit or proceeding.

“Property Costs” means all operating and development expenses and capital expenditures incurred in the ordinary course of business and, where applicable, in accordance with the relevant operating or unit agreement or pooling order, if any, attributable to the use, maintenance, operation and ownership of the Oil & Gas Assets, including: (a) overhead costs charged to the Oil & Gas Assets by Third Party operators; (b) development costs and expenditures (including costs related to confirming title to, permitting, drilling, completing, fracturing, testing, deepening, plugging back, side tracking, reworking and operating xxxxx on the Oil & Gas Assets); (c) costs incurred in connection with ordinary course lease maintenance and leasing activities to the extent permitted pursuant to Section 9.1; (d) costs associated

with gathering, transporting, processing and marketing production and other Hydrocarbons from the Oil & Gas Assets; and (e) any costs and expenses that customarily appear on a lease operating statement, which for the avoidance of doubt, shall include company labor associated with first line supervision and below. Notwithstanding the foregoing, “Property Costs” shall not include any costs, expenses, obligations or liabilities to the extent attributable to the following: (i) personal injury or death, property damage, torts, breach of Contract claims or violation of Law, (ii) the costs to correct, cure, and remedy any Title Defect, Environmental Defect (including remediation of any Environmental Liabilities, including obligations to remediate any contamination of groundwater, surface water, soil, sediments, or personalty under applicable Environmental Laws), Casualty Loss or lease acquisition, bonus or maintenance payments to the extent not permitted pursuant to Section 9.1 or relating to the permanent plugging or abandonment (or dismantling or decommissioning or restoration) of any Oil & Gas Asset, (iii) obligations with respect to any Imbalance associated with the Oil & Gas Assets, (iv) obligations with respect to Suspense Funds or the payment of Royalties, (v) any Taxes, (vi) overhead or general and administrative expenses (including corporate G&A) attributable to any period from the Effective Time to the Closing Date (which shall be exclusively addressed in Section 2.3(b)(i)(G)), (vii) Specified Obligations, (viii) any payments made or costs or expenses incurred in connection with the cure or attempt to cure any breach of this Agreement or any Related Agreement, (ix) any monthly hedge settlements or unwind costs with respect to Hedge Contracts, including any liquidation and/or termination fees or payments payable upon the liquidation thereof (which shall be exclusively addressed in Section 2.3(b)(i)(I)), and (x) claims for indemnification or reimbursement from Third Parties with respect to costs of the types described in the preceding clauses (i) through (ix).

“Purchase Price” is defined in Section 2.2(a).

“Reference Price” means the volume weighted average share price per share of Parent Common Stock on the NYSE (as reported by Bloomberg L.P. under the function “VWAP”) for the 20 consecutive trading Business Days ending on and including the first trading Business Day preceding the date of the applicable determination of value of any share of Parent Common Stock for purposes of this Agreement.

“Registration Rights Agreement” means the Registration Rights Agreement in the form attached to this Agreement as Exhibit F to be executed and delivered by Xxxxxx and Seller at Closing.

“Related Agreements” means, collectively the Cash Escrow Agreement, the Stock Escrow Agreement, the Registration Rights Agreement and each other agreement, document, instrument or certificate contemplated by this Agreement to be executed in connection with the transactions contemplated by this Agreement.

“Releases of Lien” is defined in Section 2.11(a)(ix).

“Remaining Disputes” is defined in Section 2.7(b).

“Replacement Hedge Providers” is defined in Section 9.15.

“Representatives” means, with respect to a given Person, such Person’s Affiliates, and such Person’s and such Person’s Affiliates’ respective officers, directors, members and other direct and indirect owners, partners, managers, employees, agents, financial, legal and other advisors, financing sources, consultants, accountants, and other representatives.

“Requisite Financial Statements” is defined in Section 9.14(a).

“Resolution Period” is defined in Section 2.7(b).

“Restricted Contact” is defined Section 9.1(f).

“Review Period” is defined in Section 2.7(b).

“Royalties” means any royalties, overriding royalties, production payments, carried interests, net profits interests, reversionary interests, back-in interests and other burdens upon, measured by or payable out of production.

“Scheduled Closing Date” is defined in Section 2.6.

“Scheduled Net Acre” is defined in Section 3.1(f)(iv).

“Scheduled NRI” is defined in Section 3.1(f)(iii).

“Securities” means any equity interests or other security of any class, any option, warrant, convertible or exchangeable security (including any membership interest, equity unit, partnership interest, trust interest) or other right, however denominated, to subscribe for, purchase or otherwise acquire any equity interest or other security of any class, with or without payment of additional consideration in cash or property, either immediately or upon the occurrence of a specified date or a specified event or the satisfaction or happening of any other condition or contingency. Notwithstanding the foregoing, “Securities” expressly exclude any real property interests or interests in any Hydrocarbon leases, fee minerals, reversionary interests, non-participating royalty interests, executive rights, non-executive rights, royalties and any other similar interests in minerals, overriding royalties, reversionary interests, net profit interests, production payments, and other royalty burdens and other interests payable out of production of Hydrocarbons.

“Securities Act” is defined in Section 6.9(a).

“Seller” is defined in the Preamble.

“Seller Fundamental Representations” means those representations and warranties of (a) Seller set forth in Section 6.1, Section 6.2, Section 6.3, Section 6.5(a), Section 6.6, Section 6.8, and (b) the Company set forth in Section 7.1, Section 7.2, Section 7.3(a), Section 7.4, Section 7.7, and Section 7.26.

“Seller Indemnified Parties” means, collectively, Seller, its Affiliates, and all of its and their respective direct and indirect stockholders, partners, members, directors, officers, managers, employees, attorneys, agents and representatives.

“Seller Overhead Amount” means an amount equal to Six Hundred Thousand Dollars ($600,000) per month for each month during the period from the Effective Time to the Closing Date, prorated for any partial month based on the number of days in the applicable month, for Seller’s general administrative expenses related to the operation of the assets during such period.

“Seller Parent” means Percussion Petroleum II, LLC, a Delaware limited liability company.

“Seller Released Parties” is defined in Section 9.13(a).

“Seller Tax Refunds” means all proceeds and other amounts in connection with any of (a) Seller Tax refund requests submitted by Seller (or to be submitted by Seller), the Company or their respective Affiliates (or their respective predecessors) to the Texas Comptroller of Public Accounts to the extent such refund requests relate to a (i) with respect to Asset Taxes, a Tax period (or portion thereof) ending prior to the Effective Time or (ii) with respect to Income Taxes, a Tax period (or portion thereof) ending on or prior to the Closing Date and (b) refunds, credits, or other offsets in lieu of refunds of Taxes of the Company or relating to the Oil & Gas Assets for any Pre-Effective Time Tax Period that are related to or arise from any matter or item identified on Schedule 11.5.

“Seller Taxes” means (a) Income Taxes imposed on Seller (or any of its Affiliates (other than the Company)), any of its direct or indirect owners, or any combined, unitary, or consolidated group of which any of the foregoing is or was a member, (b) Income Taxes imposed on the Company (or any of its Affiliates), any of its direct or indirect owners, or any combined, unitary, or consolidated group of which any of the foregoing is or was a member, in each case, in respect of a taxable period (or portion thereof)

ending on or prior to the Closing Date, (c) Taxes allocable to Seller pursuant to Section 11.1(a) (taking into account, and without duplication of, such Asset Taxes effectively borne by Seller as a result of (i) the adjustments to the Purchase Price made pursuant to Section 2.3 and (ii) any payments made from one Party to the other Party in respect of Asset Taxes pursuant to Section 11.1(c)) and (d) any and all Taxes (other than the Taxes described in clauses (a), (b) or (c) of this definition) imposed on or with respect to the acquisition, ownership or operation of the Oil & Gas Assets or the production of Hydrocarbons or the receipt of proceeds therefrom for any Pre-Effective Time Tax Period.

“Shortfall Amount” is defined in Section 2.7(e).

“Specified Inventory” has the meaning set forth in the definition of Equipment.

“Specified Obligations” means all liabilities and obligations to the extent related to or attributable to:

(a) personal illness, injury (including death) or property damage attributable to the Company’s ownership, operation or use of any Oil & Gas Asset prior to the Closing;

(b) any transportation or disposal by the Company or any of its Affiliates of Hazardous Materials off-site prior to the Closing;

(c) accounting for, failure to pay, or the incorrect payment to any royalty owner, overriding royalty owner, working interest owner or other interest holder under the Leases of proceeds from the sale of Hydrocarbons and any escheat obligations, in each case, to the extent (i) not attributable to Suspense Funds and (ii) the same are attributable to the period that Hydrocarbons were produced and marketed from any Oil & Gas Assets during the Company’s period of ownership of the Oil & Gas Assets prior to the Effective Time;

(d) civil, administrative or criminal fines, penalties or sanctions imposed by any Governmental Authority with respect to the Company’s or any of its Affiliates’ ownership, operation or use of the Oil & Gas Assets prior to the Closing Date (but expressly excluding such fines, penalties or sanction attributable to, or resulting from, circumstances relating to Environmental Laws, other than fines or penalties relating to (i) the flaring of gas by the Company or any of its Affiliates from the Oil & Gas Interests prior to the Closing Date or (ii) any violation or failure by the Company or any of its Affiliates to comply with any Environmental Permit applicable to the Oil & Gas Interests prior to the Closing Date);

(e) any claims (i) by the Company’s or any of its Affiliates’ employees with respect to the employment relationship between the Company or its Affiliates, on the one hand, and such employees, on the other hand, or (ii) with respect to employee benefit plans of the Company or its Affiliates, in either case, attributable to the period of time prior to the Closing Date; and

(f) Indebtedness (other than Credit Document Indebtedness).

“Specified Reference Price” means $32.50 per share of Parent Common Stock.

“Specified Representations” means those representations and warranties of the Company set forth in Section 7.6, Section 7.8, Section 7.13, Section 7.14, Section 7.19, Section 7.22, Section 7.23, Section 7.28, Section 7.29, Section 7.30 and Section 7.32.

“Stock Consideration” is defined in Section 2.2(a)(ii).

“Stock Defect Escrow Account” is defined in Section 3.1(e)(i).

“Stock Escrow Agreement” means the escrow agreement to be executed at Closing pertaining to the Indemnity Holdback Shares and (if applicable) the Defect Escrow Shares, by and among Seller, the Buyer Parties and the Transfer Agent in the form attached to this Agreement as Exhibit E.

“Stock Indemnity Holdback Account” is defined in Section 10.10(a).

“Straddle Period” means any Tax period that includes, but does not end on, the date on which the Effective Time occurs.

“Subject Interval” means (a) with respect to a Well, the currently producing (or most recently produced if not currently producing) formation of such Well and (b) with respect to a Lease (but not as to a Well to which such Lease is attributed production), the First Bone Spring, the Second Bone Spring, the Third Bone Spring, the Wolfcamp A, the Wolfcamp B and the Wolfcamp C (each as defined on Schedule SI), as specified for such Lease on Annex A-1.

“Subsidiary” with respect to any relevant Person as of the date the determination is being made means any other Person that (a) is Controlled (directly or indirectly) by such Person and (b) the equity entitled to vote to elect the board of directors, board of managers or other governing authority of which is more than fifty percent (50%) owned (directly or indirectly) by the relevant Person.

“Surface Interest” has the meaning set forth in the definition of Oil & Gas Assets.

“Suspense Funds” means all amounts controlled by the Company and its Affiliates that are held in suspense and are attributable to the Oil & Gas Assets (including any such amounts attributable to other Working Interest owners’ interest in such assets).

“Tail Policy” is defined in Section 9.5(b).

“Target Indemnified Persons” is defined in Section 9.5(a).

“Target Interests” is defined in the Recitals.

“Tax” or “Taxes” means each of (a) any U.S. federal or state, local or non-U.S. income, gross receipts, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, conservation, custom duties, capital stock, intangible property, production, license, lease, leasehold interest, capital gains, goods and services, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add on minimum, estimated or other tax, fee or other similar charge in the nature of a tax imposed by any Governmental Authority, together with any interest, fine or penalty, or addition thereto, whether disputed or not, and (b) liabilities in respect of any item described in clause (a) above that arises by reason of a contract, assumption, transferee or successor liability, operation of Law (including by reason of participation in a consolidated, combined or unitary tax return) or otherwise, (c) any liability for the payment of amounts described in clauses (a) or (b) as a result of any tax sharing, tax indemnity, tax allocation agreement, or any other agreement to indemnify any other Person, and (d) any liability, expense, or loss incurred in connection with the determination, settlement, or litigation of any of the foregoing.

“Tax Return” means any return, report, declaration, claim for refund, election, certificate, information return, statement, or any other similar document relating to Taxes, including any schedule or attachment thereto and any amendment thereof or modification or supplement thereto.

“Termination Date” is defined in Section 13.1(c).

“Third Party” means any Person other than a Party to this Agreement or an Affiliate of a Party to this Agreement.

“Third Party Claim” is defined in Section 10.6(b).

“Title Arbitrator” is defined in Section 3.1(h)(ii).

“Title Benefit” means any right, circumstance, or condition that operates to: (a) increase the Net Revenue Interest of the Company in any Lease above that shown on Annex A-1 for such Lease (as to the Subject Interval of such Lease) or in any Well above that shown on Annex A-2 for such Well, without causing a greater than proportionate increase in the Company’s Working Interest above that shown on Annex A-1 for such Lease (as to the Subject Interval of such Lease) or Annex A-2 for such Well; (b) decrease the Working Interest of the Company in any Lease below that shown on Annex A-1 for such Lease (as to the Subject Interval of such Lease) or any Well below that shown on Annex A-2 for such Well, without a proportionate decrease in the Company’s Net Revenue Interest below that shown on Annex A-1 for such Lease or Annex A-2 for such Well; or (c) as to the Subject Interval of a Lease, increase the Net Acres of the Company in such Lease above that shown on Annex A-1 for such Lease (disregarding any such increase under clause (c) of the definition of Net Acres).

“Title Benefit Property” is defined in Section 3.1(g).

“Title Benefit Value” is defined in Section 3.1(g).

“Title Deductible Amount” means an amount equal to $8,400,000.

“Title Defect” means any Lien, charge, encumbrance, obligation, defect, or other matter that causes the Company to have less than Defensible Title in and to the affected Lease or Well set forth on Annex A-1 or Annex A-2, as applicable.

“Title Defect Notice” is defined in Section 3.1(a).

“Title Defect Property” is defined in Section 3.1(d)(ii).

“Title Defect Value” is defined in Section 3.1(f).

“Title Escrow Amount” is defined in Section 3.1(e)(i).

“Title Escrow Shares” is defined in Section 3.1(e)(i).

“Title Threshold Amount” is defined in Section 3.1(i)(ii).

“Transaction Expenses” means, with respect to the Company as of the date the determination is being made, without duplication: all fees, costs and expenses (including fees, costs and expenses of third-party advisors (including Tudor, Pickering, Xxxx & Co.), legal counsel (including Xxxxxx), investment bankers or other representatives) incurred by the Company in connection with the transactions contemplated this Agreement and the Related Agreements (including fifty percent (50%) of the escrow fee payable to the Escrow Agent), except that in no event shall Transaction Expenses include: (a) any fees, costs or expenses initiated or otherwise incurred at the request of Buyer or any of its Affiliates or representatives; (b) fifty percent (50%) of any fees, costs or expenses incurred with respect to the Tail Policy; (c) any fees, costs or expenses related to any financing activities in connection with the transactions contemplated by this Agreement; (d) any fees, costs and expenses contemplated pursuant to Section 9.4 or elsewhere in this Agreement to be borne by Buyer; and (e) all transaction bonus payments, change in control payments, retention bonus payments, severance payments, payments in respect of the exercise, termination or cash-out of stock options or vesting or settlement of restricted stock, restricted stock units or other equity incentive awards, or other compensatory payments payable by the Company to any current or former employee, director or independent contractor of the Company, in each case, in connection with the closing of the transactions contemplated by this Agreement or the other Related Agreements and the employer portion of all related payroll, social security, unemployment or similar Taxes in connection with the payment of any such amounts (computed as though all such payments were payable at the Closing). For the avoidance of doubt, no Indebtedness shall be included in “Transaction Expenses.”

“Transfer Agent” means American Stock Transfer & Trust Company, LLC.

“Transfer Taxes” means any and all transfer (including, without limitation, for the avoidance of doubt, bulk transfer, real property, and tangible personal property), sales, use, goods and services, value added, documentary, stamp, stamp duty, mortgage, registration, license, lease, leasehold interest, deed recording fee, recording, recordation, filing, gross receipts, excise, stock, and conveyance taxes and other similar Taxes, duties, fees, or charges (including, for the avoidance of doubt, any deficiency, interest, additions to tax, or interest and penalties with respect thereto) assessed, incurred, imposed by any Governmental Authority as a result of, or payable or collectible in connection with, the transactions contemplated by this Agreement.

“Transition Services Agreement” means a transition services agreement, by and between Buyer and Seller, substantially in the form attached hereto as Exhibit G.

“University Lands” means, collectively, (a) the Commissioner of the General Land Office, on behalf of the State of Texas and (b) the Board for Lease of University Lands.

“VDR” is defined in Section 1.2.

“Xxxxx” means all oil, gas, CO2, water, injection and disposal xxxxx, in which the Company owns an interest, whether producing, shut-in, plugged or abandoned, including those Xxxxx set forth on Annex A-2.

“Working Interest” means, with respect to any Lease or Well (limited to the Subject Interval for such Lease or Well and subject to any reservations, limitations or depth restrictions described on Annex A-1 or Annex A-2), the percentage interest in and to such Lease or Well that is burdened with the obligation to bear and pay costs and expenses of maintenance, development and operations on or in connection with such Lease or Well, but without regard to the effect of any Royalties.

Section 1.2 Construction. Whenever the context may require, any pronoun includes the corresponding masculine and feminine forms. Words in the singular or the plural include the plural or the singular, as the case may be. All references in this Agreement to Articles, Sections, preamble, recitals, paragraphs and Schedules shall be deemed to be references to Articles, Sections, preamble, recitals, paragraphs and Schedules of this Agreement unless the context otherwise requires. All Schedules, Annexes and Exhibits attached to this Agreement are made a part of this Agreement for all purposes. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “or” means and includes “and/or” unless the context requires otherwise. References to any Contract are to that Contract as amended, modified or supplemented from time to time in accordance with the terms of such Contract and this Agreement. The words “hereof”, “herein”, “hereunder”, and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise expressly provided in this Agreement, any statute or Law defined or referred to in this Agreement means such statute or Law as from time to time amended, modified or supplemented, including by succession of comparable successor statutes. The terms “dollars” or “$” mean dollars in the lawful currency of the United States of America. The terms “day” and “days” mean and refer to calendar day(s). Each accounting term not defined in this Agreement (including by express reference to GAAP), and each accounting term partly defined in this Agreement to the extent not defined, will have the meaning given to it under GAAP and XXXXX, as in effect on the Execution Date. The use of the phrase “ordinary course of business” or other derivations of “ordinary course of business” shall mean “ordinary course of business consistent with past practice”. Wherever in this Agreement there is a consent right of a Party or a reference to the “satisfaction” or “sole discretion” of a Party, such Party shall be entitled to consider solely its own interests (and not the interests of any other Person) or, at its sole election, any such other interests and factors as such Party desires. When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day. Any reference in this Agreement to “made available” means a document or other item of information that was provided or made available to Buyer and its Representatives in that certain virtual data room related to this Agreement titled “5-1-23 Provided Materials,” “CPE VDR sent 20230419,” “34a_Hedges.zip,” “Additional M&M Contracts,” “CPE VDR sent 20230111” and “CPE VDR sent 20230106,” each hosted by DropBox and “Phantom 2022-06-13

1345” hosted by DatasiteDiligence (collectively, the “VDR”) (and remains in the VDR without removal for at least thirty (30) days following the Closing), or was otherwise furnished in writing to Buyer or its Representatives, in each case, at least one (1) Business Day prior to the Execution Date.

ARTICLE 2
PURCHASE AND SALE TRANSACTION

Section 2.1 Purchase and Sale. At the Closing, upon the terms and conditions set forth in this Agreement, Seller shall sell, transfer, convey, assign and deliver to Buyer, and Buyer shall purchase and accept from Seller, the Target Interests, free and clear of all Liens, except for Liens arising under federal and state securities Laws, arising pursuant to the Governing Documents of the Company, arising pursuant to this Agreement or created or imposed by Buyer or any of its Affiliates.

Section 2.2 Purchase Price.

(a) The aggregate consideration for the Target Interests to be purchased by Buyer pursuant to this Agreement shall be $255,000,000.00 (the “Base Purchase Price”) plus the Adjustment Amount (as adjusted, the “Purchase Price”). The Base Purchase Price shall consist of:

(i) $45,000,000.00 (the “Cash Purchase Price”); and

(ii) a number of shares of Parent Common Stock having a value equal to $210,000,000.00 determined by reference to a price per share of Parent Common Stock equal to the greater of (A) the Specified Reference Price and (B) the Closing Reference Price (the “Stock Consideration”).

(b) For the avoidance of doubt, if the Adjustment Amount is a positive (+) number, then the Base Purchase Price shall be increased by such Adjustment Amount and if the Adjustment Amount is a negative (–) number, then the Base Purchase Price shall be decreased by such Adjustment Amount, in each case, as provided in Section 2.3(c). The Purchase Price shall be subject to adjustment after the Closing pursuant to Section 2.7. In addition, the Payoff Amount shall be paid by Xxxxx on behalf of Seller and its Affiliates, by wire transfer of immediately available funds, in such amounts and to such accounts as set forth in the Payoff Letters.

(c) Without limiting any other provisions in this Agreement, if at any time during the period between the Execution Date and the Closing there are any changes in the outstanding number of shares of Parent Common Stock by reason of any reclassification, recapitalization, stock split (including reverse stock split), subdivision, combination, exchange, or readjustment of shares or similar transaction, or any stock dividend or distribution paid in stock, the Stock Consideration, the Specified Reference Price, the Closing Reference Price and any other amounts or similarly dependent items related to the Parent Common Stock, the Specified Reference Price, the Closing Reference Price or the Stock Consideration shall be appropriately and equitably adjusted to reflect such change to provide the same economic effect as contemplated by this Agreement prior to such action (and thereafter all references in this Agreement to “Parent Common Stock,” “Stock Consideration,” “Specified Reference Price,” “Closing Reference Price” and other similarly dependent items shall be references to such terms, as so adjusted); provided that this Section 2.2(c) shall in no event be construed to permit any Buyer Party or any of its Affiliates to take any action with respect to the Parent Common Stock that is prohibited by the terms of this Agreement.

(d) If prior to Closing, it is determined that, as a result of receiving the Stock Consideration, Seller (together with its Affiliates) would Beneficially Own in excess of the Beneficial Ownership Limitation, then the Cash Purchase Price will be increased and the Stock Consideration will be decreased, in offsetting amounts, by the minimum amount necessary to ensure that Seller does not exceed the Beneficial Ownership Limitation (such adjustment, if any, a “Beneficial Ownership Adjustment”). For purposes of this Section 2.2(d), in determining the number of outstanding shares of Parent Common Stock, Seller may rely on the number of outstanding shares of Parent Common Stock as stated in the most recent of the following: (i) Parent’s most recent periodic or annual report filed with the Securities and Exchange Commission, as the case may be, (ii) a more recent public announcement by Parent, or (iii) a

more recent written notice by Parent or the Transfer Agent setting forth the number of shares of Parent Common Stock outstanding. Upon the written or oral request of Seller, Parent shall within one trading day confirm orally and in writing to Seller the number of shares of Parent Common Stock then outstanding. For purposes of this Section 2.2(d), the value of any Stock Consideration shall be the greater of (A) the Specified Reference Price and (B) the Closing Reference Price.

Section 2.3 Effective Time; Proration of Costs and Revenues; Adjustment Amount.

(a) Subject to the other terms and conditions of this Agreement, the Target Interests shall be transferred from Seller to Buyer at the Closing, but certain financial benefits and burdens of the Oil & Gas Assets shall be transferred effective as of the Effective Time, as described below; provided that, for the avoidance of doubt, the Closing shall be treated for Income Tax purposes as the time when the Target Interests are transferred from Seller to Buyer. As between Buyer and Seller, for purposes of calculating the Adjustment Amount pursuant to this Section 2.3, subject to the occurrence of Closing, (i) Buyer shall be entitled to all revenues, production, proceeds, income, accounts receivable, and products earned from or attributable to the Oil & Gas Assets from and after the Effective Time, and to all other income, proceeds, receipts, and credits earned with respect to the Oil & Gas Assets or the operation of the business of the Company from and after the Effective Time (provided that, notwithstanding the preceding, Seller and its Affiliates shall be entitled to all proceeds of cash calls and xxxxxxxx and other funds received for the account of Third Parties with respect to any of the Oil & Gas Assets operated by Seller or its Affiliates for all periods prior to the Closing Date, but only to the extent that such proceeds and funds are actually used by Seller (or its Affiliate) to pay for expenditures on behalf of such Third Parties in Seller’s (or its Affiliate’s) role as operator of the Oil & Gas Assets prior to the Closing Date, in which case, Buyer (and the Company) shall not be burdened by any such expenses through an upward adjustment to the Purchase Price or otherwise), (ii) Buyer shall also be responsible for (and entitled to any refunds with respect to) all Property Costs attributable to the Oil & Gas Assets which are incurred from and after the Effective Time, (iii) Seller shall be entitled to all revenues, production, proceeds, income, accounts receivable, and products earned from or attributable to the Oil & Gas Assets prior to the Effective Time, and to all other income, proceeds, receipts, and credits earned with respect to the Oil & Gas Assets or the operation of the business of the Company prior to the Effective Time and to proceeds from cash calls and xxxxxxxx and other funds received for the account of Third Parties for all periods prior to the Closing Date, as described in Section 2.3(a)(i) above, but only to the extent that such proceeds and funds are actually used by Seller (or its Affiliate) to pay for expenditures on behalf of such Third Parties in Seller’s (or its Affiliate’s) role as operator of the Oil & Gas Assets prior to the Closing Date, in which case, Buyer (and the Company) shall not be burdened by any such expenses through an upward adjustment to the Purchase Price or otherwise, and (iv) Seller shall also be responsible for (and entitled to any refunds with respect to) all Property Costs attributable to the Oil & Gas Assets which are incurred prior to the Effective Time. Should Buyer or the Company receive after Closing any income, proceeds, revenue, or other amounts to which Seller is entitled under this Section 2.3(a), Buyer shall, and shall cause the Company to, fully disclose, account for, and promptly remit the same to Seller. If, after Closing, Seller receives any income, proceeds, revenue, or other amounts with respect to the Oil & Gas Assets or the Company to which Seller is not entitled pursuant to this Section 2.3(a), Seller shall fully disclose, account for, and promptly remit the same to Buyer (or its designee). Should Buyer or the Company pay after Closing any Property Costs for which Seller is responsible under this Section 2.3(a), Seller shall reimburse Buyer (or its designee) promptly after receipt of an invoice with respect to such Property Costs, accompanied by copies of the relevant vendor or other invoice and proof of payment. Should Seller pay after Closing any Property Costs for which Seller is not responsible under this Section 2.3(a), Buyer shall, or shall cause the Company to, reimburse Seller promptly after receipt of an invoice with respect to such Property Costs, accompanied by copies of the relevant vendor or other invoice and proof of payment. From and after the date that is twelve (12) months after the Closing Date, Seller shall have no further entitlement to amounts earned from the sale of Hydrocarbons produced from or attributable to the Oil & Gas Assets and other income earned with respect to the Oil & Gas Assets and no further responsibility for Property Costs incurred with respect to the Oil & Gas Assets. As used in this Section 2.3, “earned” and “incurred” shall be interpreted in accordance with GAAP and Council of Petroleum Accountants Society (XXXXX) standards. For purposes of allocating production (and proceeds and accounts receivable with respect thereto) under this Section 2.3(a), (A) liquid Hydrocarbons shall be deemed to be “from or attributable to” the Oil & Gas Assets when they pass through the inlet flange of the pipeline connecting into the storage facilities into which they are run or, if there are no such storage facilities, when they pass through the

LACT meters or similar meters at the initial point of entry into the pipelines through which they are transported from the field and (B) gaseous Hydrocarbons shall be deemed to be “from or attributable to” the Oil & Gas Assets when they pass through the delivery point sales meters (or other custody transfer meters, whichever is closest to the Well) on the pipelines through which they are transported. In order to accomplish the foregoing allocation of production, the Parties shall rely upon (1) the gauging, metering and strapping procedures which were conducted by Seller or the Company on or about the Effective Time and (2) data and information provided by Third Party operators (if applicable) of the Oil & Gas Assets; provided, that, if any such data or information has not been provided by a Third Party operator as of the relevant time, then Seller shall make a good faith estimate of such allocations or adjustments, as applicable, based on the best data and information available to Seller at such time. Seller and the Company shall utilize reasonable interpolative procedures, to arrive at an allocation of production from or attributable to the Oil & Gas Assets when exact meter readings or gauging and strapping data are not available. Rights-of-way fees, insurance premiums, and other Property Costs that are paid periodically shall be prorated based on the number of days in the applicable period falling before and the number of days in the applicable period falling at and after the Effective Time. In each case, Buyer (on behalf of the Company) shall be responsible for the portion allocated to the period at and after the Effective Time and Seller shall be responsible for the portion allocated to the period before the Effective Time. Notwithstanding anything in this Agreement to the contrary, (I) the allocation and proration of Taxes shall be addressed in Section 11.1 and (II) should Buyer, the Company or any of their respective Affiliates receive after Closing any proceeds or other amounts relating to the Seller Tax Refunds, Buyer shall (or shall cause the Company to) fully disclose, account for, and promptly remit the same to Seller.

(b) The Adjustment Amount shall be calculated, without duplication, as follows:

(i) increased by the following amounts:

(A) an amount equal to, to the extent that such amounts have been received by Buyer (or the Company after Closing) and not remitted, distributed, or paid to Seller, (1) all proceeds from the production of Hydrocarbons from or attributable to the Oil & Gas Assets prior to the Effective Time, in each case, net of (to the extent not previously deducted from the proceeds actually received by Buyer (or the Company after Closing)): (I) amounts payable as Royalties, (II) marketing fees and transportation fees, and other post-production expenses charged by Third Parties, and (III) gravity adjustments for which there is no payment in connection with the sale of such Hydrocarbons, and (2) any other amounts to which Seller is entitled pursuant to Section 2.3(a);

(B) an amount equal to the market value of all Hydrocarbons attributable to the Oil & Gas Assets in storage or existing in stock tanks (excluding tank bottoms), pipelines (excluding linefill) and/or plants (including inventory), in each case that are, as of the Effective Time, (x) upstream of the pipeline connection or (y) upstream of the sales meter, the value to be based upon the contract price in effect as of the Effective Time (or if there is no contract price, then the market price in effect as of the Effective Time in the field in which such Hydrocarbons were produced or if actually sold prior to the date of determination, the proceeds actually recovered by Xxxxx (or the Company after Closing) attributable to such sale), net of: (1) amounts payable as Royalties; (2) marketing fees and transportation fees, and other post-production expenses charged by Third Parties; and (3) gravity adjustments for which there is no payment in connection with the sale of such Hydrocarbons;

(C) the aggregate amount of all Property Costs to the extent attributable to the Oil & Gas Assets that are incurred at and after

the Effective Time but that have been paid or economically borne by Seller (or the Company prior to the Closing), but excluding any amounts previously reimbursed to Seller pursuant to Section 2.3(a);

(D) the amount of all prepaid Property Costs paid by Seller (or by the Company prior to Closing) with respect to the ownership or operation of the Oil & Gas Assets after the Effective Time;

(E) to the extent the Company is under-produced or over-delivered as of the Effective Time, as complete and final settlement of all such Imbalances, the sum of (1) the product of the underproduced and/or overdelivered volumes of gaseous Hydrocarbons (excluding natural gas liquids) times the applicable Imbalance Amount for such volumes of gaseous Hydrocarbons, (2) the product of the underproduced and/or overdelivered volumes of liquid Hydrocarbons (excluding natural gas liquids) times the applicable Imbalance Amount for such volumes of liquid Hydrocarbons and (3) the product of the underproduced and/or overdelivered volumes of natural gas liquids times the applicable Imbalance Amount for such volumes of natural gas liquids;

(F) the aggregate amount of all Taxes allocated to Buyer pursuant to Section 11.1(a) and that have been, or are, paid or economically borne by the Company prior to the Closing or by Seller;

(G) for the period of time from the Effective Time until Closing, a monthly charge equal to the Seller Overhead Amount, prorated for any partial months, as the sole charge under this Agreement in respect of Seller’s, the Company’s and their respective Affiliates’ general and administrative expenses with respect to the ownership and operation of the Company and the Oil & Gas Assets;

(H) the Interest Payment Adjustment Amount;

(I) the Hedge Adjustment Amount; and

(J) any other amount provided for elsewhere in this Agreement or otherwise agreed upon in writing by the Parties as an upward adjustment to the Adjustment Amount;

(ii) decreased by the following amounts:

(A) an amount equal to, to the extent that such amounts have been received by Seller (or the Company prior to Closing) and not remitted or paid to Buyer (or the Company after Closing), (1) all proceeds from the production of Hydrocarbons from or attributable to the Oil & Gas Assets at and after the Effective Time (including the sale of Hydrocarbons contained in stock tanks, pipelines and/or plants (including inventory) as of the Effective Time, for which an upward adjustment to the Base Purchase Price was made pursuant to Section 2.3(b)(i)), in each case, net of (to the extent not previously deducted from the proceeds actually received by Seller): (a) amounts payable as Royalties, (b) marketing fees and transportation fees, and other

post-production expenses charged by Third Parties, and (c) gravity adjustments for which there is no payment in connection with the sale of such Hydrocarbons, and (2) any other amounts to which Buyer is entitled pursuant to Section 2.3(a);

(B) the aggregate amount of all Property Costs and other costs to the extent attributable to the Oil & Gas Assets that are incurred prior to the Effective Time but that have been paid or economically borne by Buyer (or the Company after the Closing), but excluding any amounts previously reimbursed to Buyer (or the Company) pursuant to Section 2.3(a);

(C) to the extent the Company is over-produced or under-delivered as of the Effective Time, as complete and final settlement of all such Imbalances, the sum of (1) the product of the overproduced and/or underdelivered volumes of gaseous Hydrocarbons (excluding natural gas liquids) times the applicable Imbalance Amount for such volumes of gaseous Hydrocarbons, (2) the product of the overproduced and/or underdelivered volumes of liquid Hydrocarbons (excluding natural gas liquids) times the applicable Imbalance Amount for such volumes of liquid Hydrocarbons and (3) the product of the overproduced and/or underdelivered volumes of natural gas liquids times the applicable Imbalance Amount for such volumes of natural gas liquids;

(D) subject to the terms of Section 3.1(d), Section 3.1(g) and Section 3.1(i), the aggregate amount of all finally determined Title Defect Values pursuant to Section 3.1(f) or Section 3.1(h);

(E) subject to the terms of Section 4.3, Section 4.4 and Section 4.6, the aggregate amount of all finally determined Environmental Defect Amounts pursuant to Section 4.5;

(F) to the extent not paid off or otherwise terminated with respect to the Company in connection with Closing, the amount of all Indebtedness (other than the Credit Document Indebtedness) as of immediately prior to the Closing;

(G) the Excess Principal Adjustment Amount (if any);

(H) the amount of all Transaction Expenses of the Company to the extent not paid by Seller prior to Closing;

(I) the aggregate amount of all Taxes allocated to Seller pursuant to Section 11.1(a) and that have been, or are, paid or economically borne by the Company after the Closing or by Buyer;

(J) the amount of the Suspense Funds as of the Closing (other than any such amounts that are held in and remain in the Bank Accounts set forth in Schedule 7.24 at Closing); and

(K) any other amount provided for elsewhere in this Agreement or otherwise agreed upon in writing by the Parties as a downward adjustment to the Adjustment Amount.

(c) For the avoidance of doubt, the Adjustment Amount shall be a single positive (+) number or negative (–) number determined by netting each amount calculated pursuant to Section 2.3(b)(i) and Section 2.3(b)(ii). Notwithstanding anything to the contrary in this Agreement, but subject to Section 2.2(d), for purposes of any Adjustment Amount included in the Closing Statement or Post-Closing Statement, Buyer may elect, in its sole discretion, for any positive Adjustment Amount to be paid in cash or in Parent Common Stock and Seller may elect, in its sole discretion, for any negative Adjustment Amount to be paid in cash or in Parent Common Stock. The number of shares of Parent Common Stock by which the Stock Consideration will be increased or decreased, as applicable, pursuant to this Section 2.3 (such number of shares of Parent Common Stock, the “Adjustment Securities”), if applicable, shall be calculated by dividing the amount of the Adjustment Amount to be paid in Parent Common Stock by the greater of (A) the Specified Reference Price and (B) the Closing Reference Price, and adding to or reducing, as applicable, the number of shares of Parent Common Stock included in the Stock Consideration by the number of Adjustment Securities so calculated. If a positive or negative Adjustment Amount is paid in cash, it will be paid by electronic transfer of immediately available funds to the account(s) designated by Seller or Buyer in writing.

(d) If, prior to the Closing, Buyer or Seller discovers an error in the Imbalances set forth on Schedule 7.18, then the Adjustment Amount shall be adjusted at Closing (based on the Imbalance Amount). In such event, Schedule 7.18 will be deemed amended immediately prior to the Closing to reflect the Imbalances for which the Adjustment Amount is so adjusted.

(e) Notwithstanding anything to the contrary in this Agreement, except as set forth in Section 2.3(b)(i)(H), Section 2.3(b)(i)(I) and Section 2.3(b)(ii)(G), there shall be no adjustment to the Base Purchase Price as a result of, or that is attributable to, the Credit Document Indebtedness or the Assumed Xxxxxx.

Section 2.4 Deposit; Escrow. No later than five (5) Business Days following the Execution Date, by wire transfer of immediately available funds into an interest-bearing escrow account (the “Escrow Account”), established pursuant to the Cash Escrow Agreement, Buyer shall deliver to the Escrow Agent a cash deposit equal to $36,000,000 (together with any interest accrued thereon, the “Deposit”), to assure each Buyer Party’s performance of their respective obligations under this Agreement and for certain other purposes set forth in this Agreement. The Deposit shall be held by the Escrow Agent in accordance with the Cash Escrow Agreement. In the event there is a Closing, the Deposit shall be applied as a credit against the Purchase Price to be delivered to Seller at Closing as provided in Section 2.11(b)(iii). If this Agreement is terminated prior to the Closing in accordance with Article 13, then the distribution of the Deposit shall be governed by the terms of Section 13.2(b) and the Cash Escrow Agreement. Notwithstanding the five (5) Business Day period provided for in the first sentence of this Section 2.4, Buyer will use its best efforts to deliver the Deposit to the Escrow Agent as soon as possible following the Execution Date.

Section 2.5 Closing Statement. At least four (4) Business Days prior to the Scheduled Closing Date (or, if the Closing will not occur on the Scheduled Closing Date, three (3) Business Days prior to the Closing Date), Seller shall deliver to Buyer, in accordance with customary industry accounting practices and based upon the best information then available to Seller, a draft settlement statement setting forth Seller’s good faith estimate of the Purchase Price after giving effect to all adjustments set forth in Section 2.3 and the Defect Escrow Amount (if any). Seller’s draft settlement statement shall include Seller’s calculation of the Adjustment Amount and each component of the Adjustment Amount, the Beneficial Ownership Adjustment (if applicable), the resulting Purchase Price, the designation of Seller’s account for the wire transfer of funds as required by Section 2.11(b)(iii) and supporting documentation reasonably necessary for Buyer to verify the calculations set forth therein (the “Closing Statement”). Together with its delivery of the Closing Statement, Seller shall also provide to Buyer its estimate of the Credit Document Indebtedness as contemplated by Section 2.12. Within two (2) Business Days after its receipt of the Closing Statement, Buyer may submit to Seller in writing any good faith objections or proposed changes to Seller’s draft Closing Statement. The Parties shall in good faith attempt to agree in writing on the draft Closing Statement as soon as possible after Xxxxxx’s receipt of Xxxxx’s written report. The estimate agreed to by Xxxxxx and Buyer, or, absent such agreement, delivered in the Closing Statement by Seller (as modified by mutual written agreement of the Parties, if applicable),

will be the amount used to calculate the Closing Payment to be paid by Buyer to Seller at the Closing. Final adjustments to the Purchase Price will be made pursuant to Section 2.7.

Section 2.6 Closing. The consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place (a) at the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000 or (b) if agreed by Buyer and Seller, electronically and remotely, on July 3, 2023 (the “Scheduled Closing Date”), or, subject to the Parties’ rights under Article 13, if all conditions to Closing set forth in Article 12 have not been satisfied, or, if permissible, waived by the Party entitled to the benefit of the conditions (other than those conditions which by their terms are required to be satisfied at Closing, but subject to the satisfaction or waiver of such conditions) by the Scheduled Closing Date, the Closing shall take place within five (5) Business Days of the date such conditions set forth in Article 12 have been satisfied, or, if permissible, waived by the Party entitled to the benefit of the conditions (other than those conditions which by their terms are required to be satisfied at Closing, but subject to the satisfaction or waiver of such conditions). Otherwise, the Closing may take place on such other date as Seller and Xxxxx mutually agree in writing (the date upon which the Closing actually occurs, the “Closing Date”). The Closing shall be deemed effective for all purposes as of 12:01 a.m. Central Time on the Closing Date.

Section 2.7 Post-Closing Adjustment.

(a) No sooner than sixty (60) days after the Closing Date, but no later than one hundred twenty (120) days after the Closing Date, Seller shall deliver to Buyer a statement (the “Post-Closing Statement”). The Post-Closing Statement shall set forth in reasonable detail Seller’s good faith calculation of: (i) the Adjustment Amount, including each component of the Adjustment Amount (and supporting documentation reasonably necessary for Buyer to verify the calculations set forth therein); and (ii) the resulting calculation of the Purchase Price (the “PC Statement Purchase Price”). In the event Seller does not deliver the Post-Closing Statement in accordance with this Section 2.7, Seller’s pre-Closing estimate of the Purchase Price shall control unless Buyer elects (in its sole discretion) to deliver a Post-Closing Statement to Seller within ten (10) Business Days after such one hundred twentieth (120th) day, in which case the Parties shall proceed in accordance with Section 2.7(b) except that the rights of Seller and Buyer shall be reversed.

(b) Buyer shall have thirty (30) days after Xxxxx’s receipt of the Post-Closing Statement (the “Review Period”) within which to review Seller’s calculation of the PC Statement Purchase Price. Seller shall provide to Buyer such data and information as Buyer may reasonably request, including any data and information supporting the amounts reflected on the Post-Closing Statement, at Buyer’s expense (to the extent such data and information is in the possession or control of Seller) and shall reasonably cooperate with Xxxxx’s review of such data and information. If Buyer disputes any component of the PC Statement Purchase Price, Buyer shall notify Seller in writing of its objection to the PC Statement Purchase Price prior to the expiration of the Review Period, together with a description of the basis for and dollar amount of such disputed components (to the extent possible) (a “Dispute Notice”). The PC Statement Purchase Price shall become final, conclusive and binding on the Parties, and be considered the Final Purchase Price for all purposes of this Agreement, unless Buyer delivers to Seller a Dispute Notice prior to the expiration of the Review Period. If Buyer timely delivers a Dispute Notice: (i) any amounts in the PC Statement Purchase Price not objected to by Buyer in a Dispute Notice by the expiration of the Review Period shall be final, conclusive and binding on the Parties; and (ii) Buyer and Seller shall, within fifteen (15) days following Seller’s receipt of such Dispute Notice (the “Resolution Period”), use commercially reasonably efforts to attempt to mutually resolve in writing their differences with respect to any remaining items set forth in the Dispute Notice. Any such mutual resolution shall be final, conclusive and binding on the Parties. If, at the conclusion of the Resolution Period, any items set forth in the Dispute Notice remain in dispute (the “Remaining Disputes”), then each of Buyer and Seller shall submit all such Remaining Disputes to the Houston, Texas office of KPMG US LLP or such other independent nationally recognized accounting firm the Parties may mutually select (the “Accounting Firm”). Within five (5) Business Days after the expiration of the Resolution Period, Buyer and Seller shall deliver to the Accounting Firm, their written position with respect to such Remaining Disputes. The Accounting Firm shall have no ex parte communications with the Parties concerning the Remaining Disputes. Based solely on the submissions by Xxxxxx and Xxxxx, and not by independent review, the Accounting Firm shall determine only the Remaining Disputes. The Accounting Firm shall act for the

limited purpose of determining the specific Remaining Disputes submitted by the Parties and may not award damages or penalties to the Parties with respect to any matter. In determining the Remaining Disputes, the Accounting Firm shall choose either Seller’s position or Xxxxx’s position with respect to each matter addressed in a Dispute Notice in accordance with this Agreement. The Parties shall request that the Accounting Firm make a decision with respect to all Remaining Disputes within forty-five (45) days after the submission of the Remaining Disputes to the Accounting Firm, as provided above, and in any event as promptly as practicable. The final determination with respect to all Remaining Disputes shall be set forth in a written statement by the Accounting Firm delivered simultaneously to Seller and Buyer. Absent manifest error, the Accounting Firm’s determination of the Remaining Disputes shall be final, conclusive and binding on the Parties and enforceable against the Parties in any court of competent jurisdiction, without right of appeal. Buyer and Seller shall promptly execute any reasonable engagement letter requested by the Accounting Firm. Buyer and Seller shall also each cooperate fully with the Accounting Firm, including: (x) by providing the information, data and work papers used by each Party to prepare and/or calculate the Purchase Price; and (y) making its personnel and accountants available to explain any such information, data or work papers, so as to enable the Accounting Firm to make such determination as quickly and as accurately as practicable. The fees, costs and expenses of the Accounting Firm pursuant to this Section 2.7(b) shall be borne one half by Seller, on the one hand, and one half by Xxxxx, on the other hand. The Parties agree to use commercially reasonable efforts to cause the Accounting Firm to agree in writing to keep strictly confidential the specifics and existence of any matters submitted as well as all proprietary records of the Parties, if any, reviewed by the Accounting Firm in the process of resolving such Remaining Disputes.

(c) From and after the Closing Date until the Final Purchase Price is finally determined pursuant to this Section 2.7, Seller, its Affiliates and their auditors, accountants, counsel and other representatives shall be permitted reasonable access to the Company and its properties, assets, auditors, accountants, personnel, books and records and any other documents or information reasonably requested by Seller (including the information, data and work papers necessary for Seller’s auditors or accountants to prepare and calculate the Purchase Price).

(d) If the Final Purchase Price (after deducting the Deposit, the Indemnity Holdback Cash, Parent Common Stock deposited into the Stock Indemnity Holdback Account and, if applicable, any cash or Parent Common Stock deposited in the Cash Defect Escrow Account or the Stock Defect Escrow Account) exceeds the estimated Purchase Price contained in the Closing Statement and paid at Closing (such excess amount, if any, the “Excess Amount”), within five (5) Business Days after the Final Purchase Price is finally determined pursuant to this Section 2.7, and subject to Section 2.2(d), Buyer shall, or shall cause the Company to, pay to Seller, in either immediately available funds or Parent Common Stock (at Buyer’s election, in its sole discretion), an aggregate amount equal to the Excess Amount. The number of shares of Parent Common Stock to be paid pursuant to this Section 2.7(d), if applicable shall be calculated by dividing the Excess Amount by the greater of (i) the Specified Reference Price and (ii) the Closing Reference Price.

(e) If the Final Purchase Price (after deducting the Deposit, the Indemnity Holdback Cash, Parent Common Stock deposited into the Stock Indemnity Holdback Account and, if applicable, any cash or Parent Common Stock deposited in the Cash Defect Escrow Account or the Stock Defect Escrow Account) is less than the estimated Purchase Price contained in the Closing Statement and paid at Closing (such shortfall amount, if any, the “Shortfall Amount”), within five (5) Business Days after the Final Purchase Price is finally determined pursuant to this Section 2.7, and subject to Section 2.2(d), Seller shall pay to Buyer, in either immediately available funds or Parent Common Stock (at Seller’s election, in its sole discretion), an aggregate amount equal to the Shortfall Amount. The number of shares of Parent Common Stock to be paid pursuant to this Section 2.7(d), if applicable, shall be calculated by dividing the Shortfall Amount by the greater of (i) the Specified Reference Price and (ii) the Closing Reference Price.

(f) Any payments made pursuant to this Section 2.7 shall be deemed an adjustment to the Purchase Price, to the extent permitted by applicable Law.

Section 2.8 Joint Interest Audits. After Closing, (a) Seller shall be entitled to resolve and shall be responsible for all joint interest audits and other audits of (i) Property Costs for which Seller is

entirely responsible under the terms of Section 2.3 or (ii) Hydrocarbons from or attributable to the Oil & Gas Assets (and all products and proceeds attributable thereto) or other income, proceeds, revenue, receipts, and credits earned with respect to the Oil & Gas Assets, in each case, to which Seller is entirely entitled under the terms of Section 2.3 (and Seller shall be solely responsible for Seller’s out-of-pocket costs and expenses incurred in connection with such audits) and (b) Buyer shall be entitled to resolve, or cause the Company to resolve, all joint interest audits and other audits of (i) Property Costs for which Buyer is entirely or in part responsible under the terms of Section 2.3 or (ii) Hydrocarbons from or attributable to the Oil & Gas Assets (and all products and proceeds attributable thereto) or other income, proceeds, revenue, receipts, and credits earned with respect to the Oil & Gas Assets, in each case, to which Buyer is entirely or in part entitled under the terms of Section 2.3 (and Buyer (on behalf of the Company) shall be solely responsible for Buyer’s and the Company’s out-of-pocket costs and expenses incurred in connection with such audits); provided that Buyer shall not agree to any adjustments to previously assessed costs for which Seller is liable, or any compromise of any audit claims to which Seller would be entitled, without the prior written consent of Seller, not to be unreasonably withheld, conditioned, or delayed. Buyer shall, or shall cause the Company to, provide Seller with a copy of all applicable audit reports and written audit agreements received by Buyer or its Affiliates and relating to periods for which Seller is wholly or partially responsible.

Section 2.9 Tax Treatment; Purchase Price Allocation. The Parties agree that the purchase and sale of the Target Interests is intended to be treated as a purchase and sale of the assets of the Company for U.S. federal Income Tax purposes (and applicable state and local Tax purposes) and no Party shall take any position in any Tax Return, in any Tax examination, audit, claim or similar Proceeding that is inconsistent with such treatment; provided, that Buyer’s obligation to act consistently with such position is contingent on the accuracy of the representation in Section 7.12(n). Within thirty (30) days following the final determination of the Final Purchase Price, Seller shall prepare and provide to Buyer an allocation of the Final Purchase Price and any other items that are treated as consideration for U.S. federal Income Tax purposes among the six categories of assets specified in Part II of IRS Form 8594 (Asset Acquisition Statement under Section 1060) (the “Allocation”). Buyer shall notify Seller in writing within thirty (30) days of receipt of the Allocation of any comments to the Allocation. If Buyer does not deliver any written notice of objection to the Allocation within such thirty (30)-day period, the Allocation shall be final, conclusive and binding on the Parties. If a written notice of objection is timely delivered to Seller, Xxxxxx and Xxxxx will negotiate in good faith for a period of twenty (20) days to resolve such dispute (the “Allocation Dispute Resolution Period”). If, during the Allocation Dispute Resolution Period, Seller and Buyer resolve their differences in writing as to any disputed amount, (a) such resolution shall be deemed final and binding with respect to such amount for the purpose of determining that component of the Allocation, (b) any subsequent adjustments to Final Purchase Price for U.S. federal Income Tax purposes shall be allocated in a manner consistent with the Allocation as finally determined, (c) the Parties shall report consistently with this Section 2.9 in all Tax Returns, including Internal Revenue Service (“IRS”) Form 8594 (or applicable successor form) and any other information or Tax Returns or supplement thereto required to be filed under Section 1060 of the Code, which each Party shall timely file with the IRS, and (d) no Party shall take any position in any Tax Return, in any Tax examination, audit, claim or similar Proceeding that is inconsistent with the Allocation, except that no Party shall be unreasonably impeded in its ability and discretion to negotiate, compromise or settle any Tax examination, audit, claim or similar proceedings in connection with the intended tax treatment or Allocation. Notwithstanding the foregoing, if Seller and Buyer cannot mutually agree on the Allocation (after good faith efforts to do so), each Party shall be entitled to determine its own allocation and file its IRS Form 8594 consistent therewith.

Section 2.10 Withholding Taxes. As of the Execution Date (and assuming the presentation of the withholding tax form or certificate described in Section 2.11(a)(v) to Buyer at or before Closing), Buyer and Seller are not aware of any applicable withholding Taxes. To the extent that Xxxxx becomes aware of any applicable withholding Taxes in respect of the transactions contemplated by this Agreement, Buyer shall: (a) use commercially reasonable efforts to provide prior written notice to Seller of such Tax; and (b) consult with Seller in good faith as to the nature of the Tax and the basis upon which such withholding is required. No notice shall be required, however, with respect to any deduction or withholding required as a result of the failure of Seller to deliver the form or certificate described in Section 2.11(a)(v). Buyer and Seller agree to use commercially reasonable efforts to cooperate with the other Party upon request to obtain available exemptions from, or reductions of, any Taxes required to be

withheld from payments under this Agreement. Notwithstanding the foregoing, Buyer shall be entitled to deduct and withhold, or cause to be deducted and withheld, from any consideration payable or otherwise deliverable pursuant to this Agreement to any Person pursuant to this Agreement such amounts as are required to be deducted and withheld with respect to the making of such payment as required by applicable Law. To the extent such amounts are so withheld and paid over to or deposited with the relevant Governmental Authority, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect to which such deduction and withholding was made.

Section 2.11 Deliveries at Closing.

(a) At the Closing and as applicable, subject to the simultaneous performance by Buyer of its obligations under Section 2.11(b), Seller and the Company shall deliver or cause to be delivered to Buyer the following:

(i) a duly executed certificate from an authorized Person of Seller and the Company in the form attached to this Agreement as Exhibit A, dated as of the Closing Date, certifying that the conditions set forth in Section 12.2(a) and Section 12.2(b) have been satisfied;

(ii) an assignment of the Target Interests in the form of Exhibit B duly executed by Xxxxxx;

(iii) an acknowledgment of the Closing Statement (if agreed to by the Parties prior to the Closing);

(iv) a joint written instruction duly executed by Xxxxxx and delivered to the Escrow Agent, instructing the Escrow Agent to distribute the full amount of the Deposit to the account(s) designated in writing by Seller prior to Closing;

(v) a valid, properly completed, and duly executed IRS form W-9 of Seller (or, if Seller is disregarded as an entity separate from its owner for U.S. federal Income Tax purposes, its regarded owner);

(vi) evidence of the termination of any Affiliate Arrangements in accordance with Section 9.10(a);

(vii) written resignations of the directors, managers and officers of the Company in accordance with Section 9.10(b);

(viii) customary payoff letters addressed to the applicable payees set forth therein providing that all Credit Document Indebtedness shall be paid off in full immediately prior to or upon Closing by wire transfer of immediately available funds (the “Payoff Letters”), in each case in form and substance reasonably satisfactory to Buyer;

(ix) (A) releases of all Liens (other than Permitted Encumbrances) that burden the Oil & Gas Assets, the Target Interests or any other asset, property or interest of the Company or any its Affiliates (including Seller Parent) and any Hedge Contract, including the Assumed Xxxxxx, (B) terminations and releases of all guarantees provided by the Company or any of its Affiliates (including Seller Parent) in respect of the Credit Document Indebtedness, (C) authorizations to file UCC-3 termination statements, mortgage releases and other applicable terminations or releases, in each case, in all applicable jurisdictions to evidence the release of all Liens (other than Permitted Encumbrances) that burden the Oil & Gas Assets, the Target Interests or any other asset, property or interest of the Company or its Affiliates (including Seller Parent) and any Hedge Contract, including the Assumed Xxxxxx and (D) all instruments and agreements, in each case, reasonably required to effect and file of record the release of all Liens (other than Permitted Encumbrances) that burden the Oil & Gas Assets, the Target Interests or

any other asset, property or interest of the Company or any of its Affiliates (including Seller Parent) (collectively, the “Releases of Lien”), in each case, in form and substance reasonably satisfactory to Buyer;

(x) the Registration Rights Agreement, duly executed by Seller;

(xi) the Stock Escrow Agreement, duly executed by Seller, if applicable;

(xii) the Transition Services Agreement, duly executed by Seller; and

(xiii) any Related Agreements that are required by the other terms of this Agreement to be executed and/or delivered by Seller or the Company at Closing.

(b) At the Closing and as applicable, subject to the simultaneous performance by Seller and the Company of their obligations under Section 2.11(a), Buyer and Parent shall deliver or cause to be delivered to Seller, the Company and, as applicable, the Transfer Agent the following:

(i) a duly executed certificate from an authorized Person of Buyer and Parent in the form attached to this Agreement as Exhibit C, dated as of the Closing Date, certifying that the conditions set forth in Section 12.3(a) and Section 12.3(b) have been satisfied;

(ii) an assignment of the Target Interests in the form of Exhibit B duly executed by Xxxxx;

(iii) by wire transfer of immediately available funds to the account designated in writing by Seller in the Closing Statement, the Closing Payment;

(iv) by wire transfer of immediately available funds to the Cash Defect Escrow Account, the Title Escrow Amount and/or Environmental Escrow Amount, if applicable;

(v) by wire transfer of immediately available funds to the Cash Indemnity Holdback Account, the Indemnity Holdback Cash;

(vi) the number of shares of Parent Common Stock equal to (A) the Closing Stock Amount, to the Persons and in the amounts designated in the Closing Statement, (B) (if applicable) the Defect Escrow Shares, to the Transfer Agent, to be held in the Stock Defect Escrow Account, and released in accordance with the terms of this Agreement and the Stock Escrow Agreement and (C) the Indemnity Holdback Shares, to the Transfer Agent, to be held in the Stock Indemnity Holdback Account, and released in accordance with the terms of this Agreement and the Stock Escrow Agreement;

(vii) evidence reasonably satisfactory to Seller that Xxxxx has delivered the number of shares of Parent Common Stock equal to the Indemnity Holdback Shares to the Transfer Agent pursuant to Section 2.11(b)(vi)(C) and (if applicable) equal to the Defect Escrow Shares to the Transfer Agent pursuant to Section 2.11(b)(vi)(B);

(viii) a joint written instruction duly executed by Xxxxx and delivered to the Escrow Agent, instructing the Escrow Agent to distribute the full amount of the Deposit to the account(s) designated in writing by Seller prior to Closing;

(ix) evidence that Xxxxx has replaced the Credit Support contemplated by Section 9.9;

(x) evidence reasonably satisfactory to Seller that Xxxxx has delivered, by wire transfer of immediately available funds to each payee identified in the Payoff

Letters, the amount required to be paid to pay off the Credit Document Indebtedness in full as of the Closing (the “Payoff Amount”);

(xi) the Novation Agreements, duly executed by the parties thereto, and any other evidence reasonably satisfactory to Seller that Buyer has satisfied is obligations with respect to the Assumed Xxxxxx pursuant to Section 9.15;

(xii) an acknowledgment of the Closing Statement (if agreed to by the Parties prior to the Closing);

(xiii) the Registration Rights Agreement, duly executed by Xxxxxx;

(xiv) the Stock Escrow Agreement, duly executed by the Buyer Parties;

(xv) the Transition Services Agreement, duly executed by Xxxxx; and

(xvi) any Related Agreements that are required by the other terms of this Agreement to be executed and/or delivered by Xxxxx at the Closing.

(c) In addition to the obligations set forth under Section 2.11(a), no later than five (5) Business Days following the Closing Date, Seller shall deliver to the Company possession of the books and records not currently held by the Company and in control of Seller; provided that for all such books and records that exist in electronic format as of the Closing Date, Seller shall make available to Buyer electronic versions of such books and records, at Buyer’s sole cost and expense, on the Closing Date; provided, however, that Seller shall not be required to conduct processing, conversion, compiling or any similar work with respect to the furnishing of such books and records.

Section 2.12 Payoff of Credit Document Indebtedness.

(a) Pursuant to Section 2.5, Seller will provide to Buyer, together with the Closing Statement, its good faith estimate of any Credit Document Indebtedness outstanding as of such time, together with Seller’s good faith estimate of the per diem increase in such outstanding amount.

(b) At the Closing and without limitation of Section 2.2 or Section 2.11(b)(x), Buyer shall pay the Payoff Amount on behalf of Seller and its Affiliates, by wire transfer of immediately available funds, in such amounts and to such accounts as set forth in the Payoff Letter.

Section 2.13 Cash Free; Indebtedness Free. At the Closing, without limiting Buyer’s obligations (a) to pay the Payoff Amount pursuant to Section 2.2(b) or (b) under Section 9.15 with respect to the Assumed Xxxxxx, the Company will not hold any cash or be responsible for any obligations to repay any Indebtedness. Accordingly, on or prior to the Closing, Seller will (i) cause the Company to distribute to Seller (or its designee) all cash (irrespective of whether such cash is attributable to Hydrocarbons produced, or events occurring, at or after the Effective Time) held by the Company and (b) repay all outstanding Indebtedness of the Company (or otherwise cause the Company to not be liable for such Indebtedness) (other than the Credit Document Indebtedness) with respect to, or binding upon, the Company or any Oil & Gas Assets. Seller represents that it is authorized to perform the actions described in the preceding sentence. Buyer hereby acknowledges that Seller shall take such actions prior to Closing and hereby agrees and consents to Seller taking such actions prior to Closing. Notwithstanding anything to the contrary herein, the Parties acknowledge and agree that the provisions of this Section 2.13 will not prejudice any Party’s rights under Section 2.3 or otherwise modify the adjustment mechanisms set forth therein.

Section 2.14 Commodity Price Earn-Out Payment. If the Company is required to make a Commodity Price Earn-Out Payment (as defined in the Oasis PSA) in January 2024 pursuant to the Oasis PSA, as determined (between the Parties) in Buyer’s sole discretion, then Seller shall pay, or cause to be paid, to Buyer no later than January 15, 2024 an amount equal to fifty percent (50%) of the Commodity Price Earn-Out Payment required to by paid by the Company pursuant to the terms of the Oasis PSA via

wire transfer in immediately available funds to such account as has been designated in writing by Buyer to Seller at least three (3) Business Days prior thereto. To satisfy its obligations pursuant to this Section 2.14, from and after the Closing and until earlier of to occur of (a) the date that Seller makes the payment described in the immediately preceding sentence and (b) January 15, 2024 to the extent no Commodity Price Earn-Out Payment is due, Seller covenants and agrees to maintain at least $12,500,000 of unrestricted Cash and Cash Equivalents on its balance sheet. For purposes of clarity but without limiting Seller’s obligations under this Section 2.14, following the Closing, the Company shall remain responsible for all of the obligations set forth in the Oasis PSA to make Commodity Price Earn-Out Payments thereunder. For federal Income Tax purposes (and applicable state and local Tax purposes), the amount of any payment made by Seller to Buyer pursuant to this Section 2.14 shall be treated, except as Seller otherwise determines (which determination shall be made in accordance with applicable Law), as an adjustment to the Purchase Price hereunder (and the Parties acknowledge that the Allocation shall be updated accordingly).

ARTICLE 3
TITLE MATTERS

Section 3.1 Independent Title Review.

(a) Buyer Independent Examination. Subject to the other provisions of this Section 3.1, from the Execution Date until 5:00 p.m. Central Time on June 20, 2023 (such time, the “Claim Deadline”) Buyer shall have the right during such period (the “Examination Period”) to conduct land and title diligence on the Oil & Gas Assets, independently on its own behalf and account (“Independent Title Review”). To assert a claim of a Title Defect, Xxxxx must deliver a Notice to Seller that complies with Section 3.1(d) on or before the Claim Deadline (a “Title Defect Notice”). Without limitation of Buyer’s rights and remedies pursuant to Section 10.1(a) (to the extent attributable to a breach of any of the Specified Representations) or Section 10.1(c) (to the extent attributable to the matters described in clause (c) of the definition of Specified Obligations), (i) no claims for Title Defects may be submitted after the Claim Deadline and (ii) any matters that may otherwise constitute Title Defects, but for which Xxxxx has not delivered a Title Defect Notice that meets all the requirements of Section 3.1(d) to Seller prior to the Claim Deadline, shall be deemed to have been waived by Buyer for all purposes. Subject to the limitations expressly set forth in this Agreement, including those set forth in Section 9.1(d), Section 9.1(e), Section 9.1(f) and Section 14.11, during the Examination Period but only with forty-eight (48) hours’ advance notice Seller shall give Buyer and its Representatives reasonable access during normal business hours to the Company’s facilities, properties, and books and records in connection with Buyer’s Independent Title Review. At its sole discretion, Seller or its Representatives may accompany Buyer during any such review. To give Seller an opportunity to commence reviewing and curing alleged Title Defects discovered by Xxxxx, on or before the end of each calendar week during the Examination Period prior to the Claim Deadline, Buyer shall use commercially reasonable efforts to give Seller written notice of all alleged Title Defects discovered by Buyer during such calendar week; provided that Xxxxx’s right to assert a Title Defect shall not be prejudiced or restricted by any failure to provide such preliminary notice and no such preliminary notice shall constitute a Title Defect Notice unless any such preliminary notice is expressly identified as a Title Defect Notice for purposes of this Section 3.1(a) and satisfies the requirements for a Title Defect Notice as set forth in Section 3.1(d). Xxxxx’s notices delivered prior to the Claim Deadline may be preliminary in nature and supplemented prior to the Claim Deadline. The fees, costs, and expenses incurred by Xxxxx in conducting its Independent Title Review or any other due diligence investigation shall be borne solely by Buyer.

(b) During the Examination Period and at its sole expense and with insurers reasonably satisfactory to Seller, Buyer shall maintain policies of insurance of the types and in the amounts as are reasonable and customary for review of the scope and duration of the Independent Title Review and Independent Environmental Review. Coverage under all insurance required to be carried by Buyer under this Agreement will: (i) be primary insurance and (ii) list the Company as an additional insured. Upon request by Xxxxxx, Buyer shall provide evidence of such insurance to Seller prior to gaining such access.

(c) Allocated Value. The “Allocated Value” means for each Lease listed on Annex A-1 and each Well listed on Annex A-2, the dollar values set forth on Annex A-1 for such Lease and

Annex A-2 for such Well. Seller and the Company have accepted such Allocated Values solely for purposes of determining any Title Defect Values, Title Benefit Values and for the purposes described in Section 4.3(b)(iii), but otherwise make no representation or warranty as to the accuracy of such values.

(d) Title Defect Notice. In order to be valid for purposes of this Agreement, each Title Defect Notice asserting a claim for a Title Defect must be in writing and must include:

(i) a description in reasonable detail of the alleged Title Defect that is sufficient for Seller to identify the basis of the alleged Title Defect;

(ii) the Lease(s) or Well(s) (and associated Oil & Gas Interest) affected by the alleged Title Defect (the “Title Defect Property”);

(iii) the Allocated Value of the Lease(s) or Well(s) subject to the alleged Title Defect;

(iv) if the alleged Title Defect involves a shortfall in the Net Revenue Interest with respect to a Lease or Well, the alleged actual Net Revenue Interest for such Lease or Well;

(v) if the alleged Title Defect involves an excess of Working Interest share with respect to a Lease or Well, the alleged actual Working Interest share for such Lease or Well;

(vi) if the alleged Title Defect involves a shortfall in the Net Acres with respect to a Lease, the alleged actual Net Acres for such Lease;

(vii) all documents in Buyer’s possession or reasonable control and upon which Xxxxx relies for its assertion of the alleged Title Defect, including supporting documents in Buyer’s possession or reasonable control reasonably necessary for Seller (as well as any experienced title attorney or examiner hired by Xxxxxx) to identify the existence of the alleged Title Defect;

(viii) Xxxxx’s good faith estimate of the Title Defect Value and the computations and information upon which such estimate is based; and

(ix) to the extent known by Xxxxx, a description of any actions required to cure such alleged Title Defect.

(e) Cure of and Remedies for Title Defects. In its sole discretion, Seller shall have the right, but not the obligation, to attempt to cure (or, prior to Closing, to cause the Company to attempt to cure) any asserted Title Defect until the date that is one hundred and twenty (120) days following the Closing Date (the “Cure Deadline”) by giving written notice to Buyer of its election to cure prior to the Closing Date. From and after Closing, Buyer shall take all actions reasonably requested by Seller to assist with the cure or removal of any such Title Defects; provided that such actions shall not require Buyer to incur any costs with respect to such assistance. If Seller elects to cure and actually cures any Title Defect prior to the Closing, then no adjustment to the Base Purchase Price will be made for such Title Defect and Buyer will be deemed to have waived such Title Defect for all purposes. Subject to Seller’s continuing right to cure or dispute the existence of a Title Defect or the Title Defect Value asserted with respect to a Title Defect, in the event that any Title Defect validly asserted by Xxxxx is not waived in writing by Buyer or cured prior to Closing, then, subject to the Title Threshold Amount and the Title Deductible Amount:

(i) if Seller elects to cure such asserted Title Defect, then at Seller’s election, in its sole discretion, either (A) the Closing Payment payable to Seller at the Closing shall be reduced by an amount equal to the Title Defect Value (or portion thereof) reasonably asserted by Buyer in good faith in the applicable Title Defect Notice

(any such amount, together with any amounts deposited into the Cash Defect Escrow Account pursuant to Section 3.1(h), the “Title Escrow Amount”) or (B) the Closing Stock Amount shall be reduced by a number of shares of Parent Common Stock equal to the Title Defect Value (or portion thereof) for such Title Defect reasonably asserted by Buyer in good faith in the applicable Title Defect Notice (any such number of shares of Parent Common Stock calculated by dividing such amount by the greater of (1) the Specified Reference Price and (2) the Closing Reference Price) (such shares of Parent Common Stock, together with any shares of Parent Common Stock deposited into the Stock Defect Escrow Account pursuant to Section 3.1(h), the “Title Escrow Shares”), in each case, taking into account the Title Threshold Amount and the Title Deductible Amount; provided that, if directed by Seller (as determined in Seller’s sole discretion), Buyer shall deposit such portion of the Title Defect Value into the Cash Defect Escrow Account or Stock Defect Escrow Account as may be directed by Seller, in which case the relevant provisions of this Agreement shall be construed accordingly. For purposes of the foregoing, (x) any such Title Escrow Amount will be deposited by Buyer into an escrow sub-account established pursuant to the Cash Escrow Agreement (the “Cash Defect Escrow Account”) at Closing and (y) any such Title Escrow Shares will be deposited by Buyer into an escrow account established pursuant to the Stock Escrow Agreement (the “Stock Defect Escrow Account”) at Closing. In the event that Seller fails to cure such Title Defect on or before the expiration of the Cure Deadline, Seller and Buyer shall execute and deliver joint written instructions to the Escrow Agent to release the Title Escrow Amount or Transfer Agent to release number of Title Escrow Shares, as applicable, attributable to such Title Defect to Buyer. Alternatively, (I) if Seller cures such Title Defect on or before the expiration of the Cure Deadline, Seller and Buyer shall execute and deliver joint written instructions to the Transfer Agent to release the number of Title Escrow Shares or Escrow Agent to release the Title Escrow Amount, as applicable, attributable to such Title Defect to Seller or (II) if the Parties agree that Seller has only partially cured such Title Defect that Seller elected to cure post-Closing pursuant to Section 3.1(e), the Parties shall reasonably agree upon the Title Escrow Amount or number of Title Escrow Shares (using the value per share at which the shares are contributed), as applicable, attributable to such Title Defect that should be released to Buyer from the Cash Defect Escrow Account or Stock Defect Escrow Account to compensate Buyer for the uncured portion of the Title Defect and the remaining Title Escrow Amount or Title Escrow Shares shall be released to Seller in accordance with the terms of the Cash Escrow Agreement or Stock Escrow Agreement, as applicable; or

(ii) if Seller does not elect to cure such asserted Title Defect, reduce the Base Purchase Price pursuant to Section 2.3(b)(ii)(D) by an amount equal to the Title Defect Value attributable to such Title Defect.

If Xxxxxx does not deliver to Buyer a notice of election with respect to the remedies set forth in this Section 3.1(e) prior to the Closing Date, then Seller shall be deemed to have elected the remedy set forth in Section 3.1(e)(i). Notwithstanding anything to the contrary set forth in this Article 3, until the Closing, Buyer shall have the right to withdraw any Title Defect asserted by Buyer, in which case this Agreement shall be construed as if such Title Defect had never been asserted, and such withdrawal by Buyer shall constitute a waiver of (x) Buyer’s right to receive an adjustment to the Base Purchase Price pursuant to this Agreement and (y) Buyer’s right to assert a breach of the special warranty of Defensible Title set forth in Section 7.32, in each case, solely with respect to such withdrawn Title Defect.

(f) Title Defect Value. If Seller elects not to cure any such Title Defect or is unable to cure any such Title Defect prior to the Cure Deadline as provided above, then the value of each such Title Defect (the “Title Defect Value”) shall be determined as follows:

(i) if Xxxxx and Seller agree in writing on the Title Defect Value, then that value shall be the Title Defect Value;

(ii) if the Title Defect is a Lien that secures an obligation that is undisputed and liquidated in amount, then the Title Defect Value shall be the amount reasonably necessary to remove such Lien;

(iii) if the Title Defect represents a discrepancy between: (A) the actual Net Revenue Interest for a Lease or Well; and (B) the Net Revenue Interest set forth on Annex A-1 for such Lease or on Annex A-2 for such Well (the “Scheduled NRI”), and the Working Interest set forth on Annex A-1 for such Lease or on Annex A-2 for such Well, as applicable, is reduced proportionately, then the Title Defect Value shall be the product of (x) the Allocated Value of such Lease or Well multiplied by (y) a fraction (1) the numerator of which is the absolute value of the amount of such discrepancy and (2) the denominator of which is the Scheduled NRI for such Lease or Well, except that if the Title Defect does not affect the applicable Lease or Well throughout its entire productive life, the Title Defect Value determined pursuant to this Section 3.1(f)(iii) shall be reduced to take into account the applicable time period only;

(iv) if the Title Defect represents a discrepancy between: (A) the actual aggregate Net Acres as to a Lease; and (B) the Net Acres set forth on Annex A-1 for such Lease (the “Scheduled Net Acres”), and there is no change in Net Revenue Interest for the Lease resulting from the Title Defect, then the Title Defect Value shall be the product of (x) the Allocated Value of such Lease multiplied by (y) a fraction (1) the numerator of which is the absolute value of the amount of such discrepancy and (2) the denominator of which is the Scheduled Net Acres for such Lease;

(v) if the Title Defect represents an obligation, encumbrance upon or other defect in title of a type not described above, the Title Defect Value shall be determined by taking into account the Allocated Value of the affected Lease or Well, the portion of the Lease or Well (or any associated Oil & Gas Interest, including the depths) affected by the Title Defect, the legal effect of the Title Defect, the potential economic effect of the Title Defect over the life of the affected Lease or Well, and such other reasonable factors as are necessary to make a proper evaluation;

(vi) notwithstanding anything to the contrary in this Article 3, and except for any Title Defect for which the Title Defect Value is determined in accordance with Section 3.1(f)(ii) and with respect to which there is recourse to the Company, the sum of all Title Defect Values with respect to any particular Lease or Well shall not exceed the Allocated Value of such Lease or Well; and

(vii) the Title Defect Value with respect to a Title Defect shall be determined without duplication of any costs or Losses included in another Title Defect Value under this Agreement or for which Buyer otherwise receives credit in the calculation of the Purchase Price; provided that (i) a single Title Defect that affects more than one Title Defect Property shall be subject to a single application of the Title Threshold Amount but (ii) for the avoidance of doubt, if a Title Defect is merely of a similar type or circumstance as another Title Defect, such Title Defects shall not be aggregated for purposes of determining whether the Title Defect Value for any such Title Defect exceeds the Title Threshold Amount.

(g) Title Benefits. Seller has the right, but not the obligation, to notify Buyer during the Examination Period of any Title Benefit discovered by Seller, which Notice must be asserted by Seller in good faith, delivered in writing and include the following: (i) a description of the Title Benefit; (ii) the affected Lease or Well (the “Title Benefit Property”); (iii) the Allocated Value of such Title Benefit Property; (iv) the amount by which Buyer reasonably believes the Allocated Value of each such Title Benefit Property is increased by such Title Benefit, and the computations and information upon which Xxxxx’s Title Benefit discovery is based; and (v) supporting documents reasonably necessary for Seller (as well as any experienced title attorney or examiner hired by Seller) to verify the existence of the alleged Title Benefit. With respect to each Title Benefit Property reported under this Agreement, an amount (the “Title Benefit Value”) equal to the increase in the Allocated Value for such Title Benefit

Property caused by such Title Benefit will be determined and agreed to by the Parties as soon as practicable and in a manner similar to that used to determine Title Defect Values pursuant to Section 3.1(f). Title Benefit Values shall be applied against and reduce the aggregate amount of Title Defect Values finally determined pursuant to this Agreement, but in no event shall Title Benefit Values result in any increase or upward adjustment to the Adjustment Amount or Base Purchase Price. Buyer shall, promptly upon discovery, use commercially reasonable efforts to furnish Seller with written notice of any Title Benefit discovered by Buyer or its Representatives while conducting Buyer’s Independent Title Review; provided that Buyer shall not have an affirmative obligation to seek to identify Title Benefits or to investigate any matter that could result in a Title Benefit.

(h) Dispute.

(i) Seller and Xxxxx shall attempt to agree on (A) the existence and Title Defect Value for all Title Defects prior to Closing (or, with respect to Seller’s post-Closing curative work, on or before the Cure Deadline) and (B) the existence and Title Benefit Value for all Title Benefits on or before the Cure Deadline. Any dispute with respect to the matters described in the preceding sentence that cannot be resolved by mutual agreement of Seller and Buyer in the time periods provided shall be exclusively and finally resolved by arbitration under this Section 3.1(h). If Buyer and Seller cannot agree upon the existence of a Title Defect (or cure of such Title Defect) or any Title Defect Value on or before the Closing Date, Seller shall convey the affected Lease or Well (and any associated Oil & Gas Interest) to Buyer (indirectly by virtue of conveying the Target Interests) at Closing and at Seller’s election, in its sole discretion, either (1) the Closing Payment payable to Seller at Closing shall be reduced by an amount equal to the Title Defect Value (or portion thereof) reasonably asserted by Buyer in good faith in the applicable Title Defect Notice or (2) the Closing Stock Amount shall be reduced by a number of shares of Parent Common Stock equal to the Title Defect Value (or portion thereof) reasonably asserted by Buyer in good faith in the applicable Title Defect Notice (such number of shares of Parent Common Stock calculated by dividing such amount by the greater of (A) the Specified Reference Price and (B) the Closing Reference Price), in each case, taking into account the Title Threshold Amount and the Title Deductible Amount. Any such Title Escrow Amount or Title Escrow Shares with respect to any such contested Title Defects will be deposited into the Cash Defect Escrow Account or Stock Defect Escrow Account, as applicable, at Closing pending final resolution of such dispute in accordance with this Section 3.1(h); provided that, if directed by Xxxxxx (as determined in Seller’s sole discretion), Buyer shall deposit such portion of the Title Defect Value into the Cash Defect Escrow Account or Stock Defect Escrow Account as may be directed by Seller, in which case the relevant provisions of this Agreement will be construed accordingly. Without limiting Seller’s continuing right to assert Title Benefits until the Cure Deadline, if Seller and Buyer cannot agree on the existence of any Title Benefits or the applicable Title Benefit Value for Title Benefits asserted on or before the Closing Date, the Closing Payment or Closing Stock Amount (calculated by dividing the Title Benefit Value by the greater of (A) the Specified Reference Price and (B) the Closing Reference Price), as applicable, shall, subject to Section 3.1(g), be increased by an amount equal to the Title Benefit Value applicable for such Title Benefit Property as reasonably determined in good faith by Seller.

(ii) In the event of any dispute that is required to be resolved under this Section 3.1(h), the disagreement shall be resolved by a title attorney with at least ten (10) years’ experience in oil and gas title matters in Texas, who shall serve as the arbiter of any such disagreements (the “Title Arbitrator”). The Title Arbitrator shall be selected by mutual agreement of Xxxxx and Seller, or absent such agreement, within three (3) Business Days of becoming aware that such agreement cannot be made as to the selection of the Title Arbitrator, by the office of the American Arbitration Association in Houston, Texas. The Title Arbitrator shall not have worked as an employee, contractor or outside counsel for any of the Parties or their Affiliates during the ten (10) year period preceding the arbitration or have any financial interest in the dispute. The arbitration proceeding shall be held in Houston, Texas, and shall be conducted in accordance with the

Commercial Arbitration Rules of the American Arbitration Association, to the extent such rules do not conflict with the terms of this Section 3.1(h). The Title Arbitrator’s determination shall be made no later than fifteen (15) days after the appointment of the Title Arbitrator. Absent manifest error, the Title Arbitrator’s determination shall be final and binding upon the Parties and enforceable against the Parties in any court of competent jurisdiction, without right of appeal. In making its determination, the Title Arbitrator shall be bound by the terms set forth in this Agreement and may consider such other matters as in the opinion of the Title Arbitrator are necessary or helpful to make a proper determination. The Title Arbitrator may consult with and engage disinterested Third Parties to advise the arbitrator, including landmen, other title attorneys, and petroleum engineers to assist the Title Arbitrator in making its determination. In making its determination with respect to each matter addressed in a Title Defect Notice, the Title Arbitrator shall choose either Seller’s or Buyer’s position and shall not come to its own independent value. The Title Arbitrator shall act as an expert for the limited purpose of determining the existence of a Title Defect (or cure of such Title Defect) or Title Benefit and the specific disputed Title Defect Values and Title Benefit Values submitted by any Party. Under no circumstances shall the Title Arbitrator award damages, interest, or penalties to either Party with respect to any other matter. Each of the Parties shall bear its own legal fees and other costs of presenting its case. The costs and expenses of the Title Arbitrator shall be borne one half by Seller, on the one hand, and one half by Xxxxx, on the other hand. Within two (2) Business Days following the final decision of the Title Arbitrator, Seller and Buyer shall execute and deliver joint written instructions to the Escrow Agent to release the Title Escrow Amount (or portion of such Title Escrow Amount) from the Cash Defect Escrow Account or the Transfer Agent to release the number of Title Escrow Shares (using the value per share at which the shares were contributed) from the Stock Defect Escrow Account, as applicable, so determined to be owed to either Party with respect to the applicable dispute, in accordance with such decision.

(i) Limitations on Title Defects. Notwithstanding anything in this Agreement to the contrary:

(i) If a Title Defect under this Article 3 results from any matter that (A) could also result in the breach of (1) any representation or warranty of Seller as set forth in Article 6 or (2) any representation or warranty of the Company as set forth in Article 7, in each case, if such representation or warranty were made as of the Claim Deadline (and the Closing were to occur as of the Claim Deadline) and (B) Buyer asserted as a Title Defect (or raised such matter in any preliminary notice of any Title Defects) in accordance with this Article 3 prior to the Claim Deadline, then (without prejudice to Buyer’s rights with respect to claims for indemnity under Section 10.1(a) for a breach of a Specified Representation) Buyer shall only be entitled to assert such matter as a Title Defect to the extent permitted by this Article 3 and, for the avoidance of doubt, shall be precluded from also asserting such matter as the basis of the breach of any such representation or warranty (other than a Specified Representation); provided, however, that if, from and after the Closing, such matter caused Buyer or its Affiliates to incur, suffer or become liable for Losses which Buyer could not have asserted with respect to such matter under this Article 3, Buyer shall not be precluded from asserting such matter as the basis of the breach of any such representation or warranty of Seller or the Company;

(ii) Buyer shall not have any right to assert, or recover for under this Agreement (and no adjustment to the Purchase Price shall be made pursuant to Section 2.3(b) for), any individual Title Defect with a Title Defect Value less than $150,000 (the “Title Threshold Amount”);

(iii) there shall be no adjustment to the Purchase Price pursuant to Section 2.3(b)(ii) for any Title Defects unless and until the sum of (A) each individual Title Defect Value (calculated separately for each Title Defect Property affected by such Title

Defect) in excess of the Title Threshold Amount less (B) the sum of all Title Benefit Values for all Title Benefits validly asserted by Seller under this Agreement, exceeds the Title Deductible Amount, after which time Buyer shall be entitled to adjustments to the Purchase Price pursuant to Section 2.3(b)(ii) only for such Title Defect Values in excess of the Title Deductible Amount.

Notwithstanding anything in this Agreement to the contrary, for all purposes of this Agreement, any Title Defect that arises by, through or under the Company or any of its Affiliates shall not be subject to the Title Threshold Amount or the Title Deductible Amount.

Section 3.2 Exclusive Rights and Obligations. THIS ARTICLE 3, ARTICLE 5, AND THE RIGHTS AND REMEDIES OF BUYER PURSUANT TO SECTION 10.1(A) (FOR ANY BREACH OF ANY OF THE SPECIFIED REPRESENTATIONS) OR SECTION 10.1(C) (TO THE EXTENT ATTRIBUTABLE TO THE MATTERS DESCRIBED IN CLAUSE (C) OF THE DEFINITION OF SPECIFIED OBLIGATIONS), AND THE RIGHTS AND REMEDIES OF THE PARTIES PURSUANT TO SECTION 13.1(G) AND SECTION 13.1(H), SET FORTH THE SOLE AND EXCLUSIVE RIGHTS AND OBLIGATIONS OF THE PARTIES WITH RESPECT TO TITLE MATTERS RELATING TO ANY ASSET OR PROPERTY OF THE COMPANY, INCLUDING THE OIL & GAS ASSETS. THE ONLY REPRESENTATIONS AND COVENANTS BEING MADE BY SELLER WITH RESPECT TO THE COMPANY’S TITLE TO THE OIL & GAS ASSETS ARE SET FORTH IN THIS ARTICLE 3 AND IN SECTION 7.32 AND REPRESENT BUYER’S SOLE AND EXCLUSIVE REMEDIES WITH RESPECT TO TITLE TO THE OIL & GAS ASSETS. ANY AND ALL OTHER REPRESENTATIONS, WARRANTIES, OR COVENANTS OF TITLE BY THE COMPANY OR SELLER, OF ANY KIND OR NATURE, EITHER EXPRESS, IMPLIED, OR STATUTORY, WITH RESPECT TO THE OIL & GAS ASSETS ARE WAIVED AND DISCLAIMED IN THEIR ENTIRETY. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, BUYER ACKNOWLEDGES AND AGREES THAT BUYER SHALL NOT BE ENTITLED TO PROTECTION UNDER (NOR HAVE THE RIGHT TO MAKE A CLAIM AGAINST) THE SPECIAL WARRANTY SET FORTH IN SECTION 7.32 FOR ANY TITLE DEFECT ASSERTED (OR ANY MATTER RAISED IN A PRELIMINARY TITLE DEFECT NOTICE) UNDER THIS ARTICLE 3 PRIOR TO THE CLAIM DEADLINE OR FOR ANY TITLE DEFECT THAT BUYER HAD KNOWLEDGE (AS DEFINED IN THIS AGREEMENT) OF PRIOR TO THE CLAIM DEADLINE.

ARTICLE 4
ENVIRONMENTAL MATTERS

Section 4.1 Examination Period. Subject to the other provisions of this Article 4, Xxxxx shall have the right during the Examination Period to conduct environmental due diligence on the Oil & Gas Assets on its own behalf and account (“Independent Environmental Review”). The fees, costs, and expenses incurred by Xxxxx in conducting its Independent Environmental Review or any other due diligence investigation shall be borne solely by Buyer.

Section 4.2 Access to Oil & Gas Assets and Records. Subject to the limitations expressly set forth in this Agreement, including those set forth in Section 9.1(d), Section 9.1(e) Section 9.1(f), and Section 14.11, Seller shall provide Buyer and its Representatives access to the Oil & Gas Assets operated by the Company to conduct an environmental review and shall provide access to and, at Buyer’s sole expense, the right to copy the records and other material environmental reports in the possession or control of Seller or the Company for the purpose of conducting an environmental review of the Oil & Gas Assets, but only to the extent that (a) Seller or the Company, as applicable, may do so without violating applicable Laws and (b) Seller or the Company, as applicable, has authority to grant such access without breaching any obligations to any Third Party or any obligations of confidentiality binding on Seller, the Company or the Oil & Gas Assets, as applicable. At its sole discretion, Seller or its Representatives may accompany Buyer during the Independent Environmental Review of the Oil & Gas Assets. Seller shall use commercially reasonable efforts to obtain permission for Buyer to gain access to Oil & Gas Assets operated by Third Parties and the records and files of such Third Parties to inspect the condition of such properties, the Oil & Gas Assets, records and files. Notwithstanding the foregoing, Seller shall have no

obligation to spend any monies or incur liability to gain access for Buyer to Oil & Gas Assets operated by Third Parties or records and files of such Third Parties for Buyer to inspect the condition of such properties, the Oil & Gas Assets, records and files. Such access by Buyer shall be limited to the normal business hours of Seller, the Company or any Third Party operator of an Oil & Gas Asset, as applicable, and Xxxxx’s investigation shall be conducted in a manner that minimizes interference with the operation of the business of the Company and any applicable Third Party operator. Except as required by Law, Buyer shall (and shall direct its Representatives to) keep and maintain confidential (and not disclose to any other Person, in whole or in part) any results of (or reports or other documents arising from) Buyer’s Independent Environmental Review and shall use such results, reports or other documents arising therefrom solely for purposes of Buyer’s diligence. If Buyer or Xxxxx’s Representative reasonably believes that it is not able to comply with the preceding sentence due to a requirement of Law, Buyer shall first notify Seller regarding the extent to which Buyer or Buyer’s Representative cannot keep and maintain confidentiality. Notwithstanding anything in this Agreement to the contrary, as part of the Independent Environmental Review, Buyer shall only be entitled to conduct a Phase I Environmental Site Assessment that satisfies the basic requirements set forth under the ASTM International Standard Practice for Environmental Site Assessments (Designation E1527-13 or any subsequent iteration), a compliance review or any other visual site assessment or review of records, reports or documents relating to the Oil & Gas Assets (a “Phase I Environmental Site Assessment”). For avoidance of doubt, Buyer shall not be permitted to conduct any testing, sampling, boring, drilling, invasive or intrusive surface or subsurface activities including a Phase II environmental site assessment, on any portion of the Oil & Gas Assets without Seller’s prior written consent, which may be withheld in Seller’s sole discretion; provided, that, if (i) any Phase I Environmental Site Assessment identifies any “Recognized Environmental Conditions”, as defined or described under the ASTM International Standard Practice for Environmental Site Assessments (Designation E1527-13 or any subsequent iteration) and recommends additional environmental property assessments on the affected Oil & Gas Assets, including the collection and analysis of samples of environmental media, in order to further investigate such “Recognized Environmental Conditions” (a “Phase II Environmental Site Assessment”), (ii) Seller rejects Buyer’s request to conduct such Phase II Environmental Site Assessment, and (iii) the Environmental Defect Amount associated with such “Recognized Environmental Conditions” is reasonably estimated to exceed the Environmental Threshold Amount (net to the Company’s interest), then any Environmental Defect Notice submitted with respect to such Oil & Gas Assets pursuant to Section 4.3 may be based upon available information and reasonable assumptions, and the lack of sampling recommended by the Phase I Environmental Site Assessment shall not invalidate such Environmental Defect Notice with respect to Section 4.3(b). In such case, Buyer shall provide Seller with copies of any Phase I Environmental Site Assessment or Phase II Environmental Site Assessment or other environmental reports prepared in connection with Buyer’s Independent Environmental Review within three (3) Business Days of Buyer’s receipt of same. Buyer shall abide by Seller’s, and any Third Party operator’s, safety rules, regulations, and operating policies provided to Buyer in writing while conducting its due diligence evaluation of the Oil & Gas Assets.

Section 4.3 Notice of Environmental Defects.

(a) Subject to the other provisions of this Article 4, to assert the existence of an Environmental Defect, Xxxxx must deliver a Notice to Seller that complies with Section 4.3(b), on or before the Claim Deadline (an “Environmental Defect Notice”).

(b) In order to be valid for purposes of this Agreement, each Environmental Defect Notice asserting a claim for an Environmental Defect with respect to any Oil & Gas Assets must be in writing and must include:

(i) a description in reasonable detail of the alleged Environmental Defect and the basis for such assertion under the terms of this Agreement (including the applicable Environmental Law violated or implicated);

(ii) the Oil & Gas Asset(s) affected by the alleged Environmental Defect (the “Environmental Defect Property”);

(iii) the Allocated Value of each Environmental Defect Property;

(iv) Xxxxx’s good faith estimate of the Environmental Defect Amount and a description of the method used to calculate such estimate; and

(v) all documents and information in Xxxxx’s possession or reasonable control supporting the existence of the Environmental Defect and reasonably necessary for Seller (as well as any attorney, consultant or examiner hired by Seller) to identify the existence of the alleged Environmental Defect; and

(vi) to the extent known by Xxxxx, a description of any action required to remediate such alleged Environmental Defect.

(c) Without limitation of Buyer’s rights and remedies pursuant to Section 10.1(a) to the extent attributable to a breach of any of the Company’s representations and warranties in Section 7.16 or Section 10.1(c) to the extent attributable to the matters described in clause (b) of the definition of Specified Obligations, no claims for Environmental Defects may be submitted after the Claim Deadline, and any matters that may otherwise constitute Environmental Defects, Environmental Conditions or Environmental Liabilities, but for which Xxxxx has not delivered an Environmental Defect Notice to Seller prior to the Claim Deadline, shall be deemed to have been waived by Buyer for all purposes. To give Seller an opportunity to commence reviewing and curing or remediating alleged Environmental Defects discovered by Xxxxx, Buyer shall use commercially reasonable efforts to give Seller, on or before the end of each calendar week during the Examination Period prior to the Claim Deadline, written notice of all alleged Environmental Defects discovered by Xxxxx during such calendar week, which notice may be preliminary in nature and supplemented prior to the Claim Deadline; provided that Xxxxx’s right to assert an Environmental Defect shall not be prejudiced or restricted by any failure to provide such preliminary notice and no such preliminary notice shall constitute an Environmental Defect Notice unless such preliminary notice is expressly identified as an Environmental Defect Notice for purposes of this Section 4.3 and meets the requirements for an Environmental Defect Notice as set forth in Section 4.3(b).

Section 4.4 Cure of and Remedies for Environmental Defects.

(a) Seller shall have the right, but not the obligation, to attempt to cure (or, prior to Closing, to cause the Company to attempt to cure) any Environmental Defect asserted by Buyer in accordance with the Lowest Cost Response at any time prior to the Termination Date (as defined in the Transition Services Agreement) (provided, however, Seller’s right to attempt to cure any such Environmental Defect during the period following Closing until the Termination Date (as defined in the Transition Services Agreement) shall be subject to the conditions that (i) Seller reasonably believes such cure can be completed prior to the Termination Date (as defined in the Transition Services Agreement) and (ii) such cure activities do not, and would not reasonably be expected to, interfere with the operation of the Oil & Gas Assets following Closing (as determined by Buyer in good faith). For purposes of clarity and notwithstanding anything to the contrary contained herein, if either of the foregoing conditions is not satisfied, Seller shall not have the right to attempt to cure the applicable Environmental Defect following the Closing and the relevant provisions of this Agreement shall be construed accordingly. If Seller elects to cure and completely cures an Environmental Defect in accordance with the Lowest Cost Response prior to the Closing, then no Purchase Price adjustment will be made for such Environmental Defect, and Buyer will be deemed to have waived such Environmental Defect for all purposes. Subject to Seller’s continuing right to cure or dispute the existence of an Environmental Defect or the Environmental Defect Amount asserted with respect to an Environmental Defect, in each case pursuant to this Section 4.4 and Section 4.5, respectively, and subject to the Environmental Threshold Amount and the Environmental Deductible Amount, in the event that any Environmental Defect timely asserted by Buyer in accordance with Section 4.3 is not waived in writing by Buyer or completely cured prior to Closing, and Xxxxxx has not disputed such Environmental Defect or the Environmental Defect Amount related to such Environmental Defect:

(i) if Seller elects to cure such asserted Environmental Defect, then at Seller’s election, in its sole discretion, either (A) the Closing Payment payable to Seller at the Closing shall be reduced by an amount equal to the Environmental Defect Amount (or portion thereof) reasonably asserted by Buyer in good faith in the applicable

Environmental Defect Notice (any such amount, together with any amounts deposited into the Cash Defect Escrow Account pursuant to Section 4.5, the “Environmental Escrow Amount”) or (B) the Closing Stock Amount shall be reduced by a number of shares of Parent Common Stock equal to the Environmental Defect Amount (or portion thereof) for such Environmental Defect reasonably asserted by Buyer in good faith in the applicable Environmental Defect Notice (any such number of shares of Parent Common Stock calculated by dividing such amount by the greater of (1) the Specified Reference Price and (2) the Closing Reference Price) (such shares of Parent Common Stock, together with any shares of Parent Common Stock deposited into the Stock Defect Escrow Account pursuant to Section 4.5, the “Environmental Escrow Shares”), in each case, taking into account the Environmental Threshold Amount and the Environmental Deductible Amount; provided that, if directed by Xxxxxx (as determined in Seller’s sole discretion), Buyer shall deposit such portion of the Environmental Defect Amount into the Cash Defect Escrow Account or Stock Defect Escrow Account as may be directed by Seller, in which case the relevant provisions of this Agreement shall be construed accordingly. For purposes of the foregoing, (x) any such Environmental Escrow Amount will be deposited by Buyer into the Cash Defect Escrow Account at Closing and (y) any such Environmental Escrow Shares will be deposited by Buyer into the Stock Defect Escrow Account at Closing. In the event that Seller fails to cure such Environmental Defect on or before the Termination Date (as defined in the Transition Services Agreement), Seller and Buyer shall execute and deliver joint written instructions to the Escrow Agent to release the Environmental Escrow Amount or Transfer Agent to release number of Environmental Escrow Shares, as applicable, attributable to such Environmental Defect to Buyer. Alternatively, (I) if Seller cures such Environmental Defect on or before the Termination Date (as defined in the Transition Services Agreement), Seller and Buyer shall execute and deliver joint written instructions to the Transfer Agent to release the number of Environmental Escrow Shares or Escrow Agent to release the Environmental Escrow Amount, as applicable, attributable to such Environmental Defect to Seller or (II) if the Parties agree that Seller has only partially cured such Environmental Defect that Seller elected to cure post-Closing pursuant to Section 4.4(a), the Parties shall reasonably agree upon the Environmental Escrow Amount or number of Environmental Escrow Shares (using the value per share at which the shares are contributed), as applicable, attributable to such Environmental Defect that should be released to Buyer from the Cash Defect Escrow Account or Stock Defect Escrow Account to compensate Buyer for the uncured portion of the Environmental Defect and the remaining Environmental Escrow Amount or Environmental Escrow Shares shall be released to Seller in accordance with the terms of the Cash Escrow Agreement or Stock Escrow Agreement, as applicable; or

(ii) if Seller does not elect to cure such asserted Environmental Defect, reduce the Base Purchase Price pursuant to Section 2.3(b)(ii)(E) by an amount equal to the Environmental Defect Amount attributable to such Environmental Defect.

(b) If Seller does not deliver to Buyer a notice of election with respect to the remedies set forth in Section 4.4(a) prior to the Closing Date, then Seller shall be deemed to have elected the remedy set forth in Section 4.4(a)(i) subject to the terms and conditions of this Section 4.4. Subject to Seller’s election to cure an Environmental Defect pursuant to this Section 4.4 and to Seller’s right to dispute an Environmental Defect pursuant to Section 4.5, from and after the Closing, Buyer and the Company shall be deemed to have assumed full responsibility for all costs and expenses attributable to such operations as may be necessary to cure, remediate, address, remove or remedy the applicable Environmental Defect and all Losses with respect to any Environmental Defect. Notwithstanding anything to the contrary set forth in this Article 4, until the Closing, Buyer shall have the right to withdraw any Environmental Defect asserted by Buyer, in which case this Agreement shall be construed as if such Environmental Defect had never been asserted, and such withdrawal by Buyer shall constitute a waiver of (x) Buyer’s right to receive an adjustment to the Base Purchase Price pursuant to this Agreement and (y) Buyer’s right to assert a breach of the representations and warranties set forth in Section 7.16, in each case, solely with respect to such withdrawn Environmental Defect.

Section 4.5 Dispute. Seller and Xxxxx shall attempt to agree on the existence and Environmental Defect Amount for all Environmental Defects prior to Closing (or, with respect to Seller’s post-Closing curative work, on or before the Termination Date (as defined in the Transition Services Agreement)). If Buyer and Seller cannot agree upon the existence of an Environmental Defect (or cure of such Environmental Defect) or any Environmental Defect Amount on or before the Closing Date, subject to Seller’s remedies set forth in Section 4.4, (a) Seller shall convey the affected Oil & Gas Asset to Buyer (indirectly by virtue of conveying the Target Interests) at Closing and at Seller’s election, in its sole discretion, (i) the Closing Payment payable to Seller at Closing shall be reduced by an amount equal to the Environmental Defect Amount (or portion thereof) reasonably asserted by Buyer in good faith in the Environmental Defect Notice or (ii) the Closing Stock Amount shall be reduced by a number of shares of Parent Common Stock equal to the Environmental Defect Amount (or portion thereof) reasonably asserted by Buyer in good faith in the Environmental Defect Notice (any such number of shares of Parent Common Stock calculated by dividing such amount by the greater of (1) the Specified Reference Price and (2) the Closing Reference Price), in each case, taking into account the Environmental Threshold Amount and the Environmental Deductible Amount. Any such Environmental Escrow Amount or Environmental Escrow Shares with respect to any such contested Environmental Defects will be deposited into the Cash Defect Escrow Account or Stock Defect Escrow Account, as applicable, at Closing pending final resolution of such dispute in accordance with this Section 4.5 and (b) such dispute shall be exclusively and finally resolved by arbitration under this Section 4.5; provided that, if directed by Seller (as determined in Seller’s sole discretion), Buyer shall deposit such portion of the Environmental Defect Amount into the Cash Defect Escrow Account or Stock Defect Escrow Account as may be directed by Seller, in which case the relevant provisions of this Agreement will be construed accordingly. Any such dispute shall be resolved by an environmental attorney with at least ten (10) years’ experience in oil and gas environmental matters in the region in which the Oil & Gas Assets are located, who shall serve as the arbiter of any such disagreements (the “Environmental Arbitrator”). The Environmental Arbitrator shall be selected by mutual agreement of Xxxxx and Seller, or absent such agreement, within three (3) Business Days of becoming aware that such agreement cannot be made as to the selection of the Environmental Arbitrator, by the office of the American Arbitration Association in Houston, Texas. The Environmental Arbitrator shall not have worked as an employee, contractor or outside counsel for any of the Parties or their Affiliates during the ten (10) year period preceding the arbitration or have any financial interest in the dispute. The arbitration proceeding shall be held in Houston, Texas, and shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association, to the extent such rules do not conflict with the terms of this Section 4.5. The Environmental Arbitrator’s determination shall be made no later than fifteen (15) days after the appointment of the Environmental Arbitrator, and, absent manifest error, shall be final and binding upon the Parties and enforceable against the Parties in any court of competent jurisdiction, without right of appeal. In making his or her determination, the Environmental Arbitrator shall be bound by the terms set forth in this Agreement and may consider such other matters as in the opinion of the Environmental Arbitrator are necessary or helpful to make a proper determination. In addition, (x) the Environmental Arbitrator may consult with and engage disinterested Third Parties to advise the Environmental Arbitrator, including environmental consultants and petroleum engineers and (y) the Environmental Arbitrator shall choose either Seller’s position or Buyer’s position with respect to each matter addressed in an Environmental Defect Notice and may not award an Environmental Defect Amount that is greater than the Environmental Defect Amount asserted in Buyer’s Environmental Defect Notice. The Environmental Arbitrator shall act as an expert for the limited purpose of determining the existence of an Environmental Defect and the specific disputed Environmental Defect Amounts submitted by any Party and may not award damages, interest or penalties to any Party with respect to any other matter. Any decision rendered by the Environmental Arbitrator pursuant to this Agreement shall be final, conclusive and binding on the Parties and will be enforceable against any of the Parties in any court of competent jurisdiction. Each of the Parties shall bear its own legal fees and other costs of presenting its case. Within two (2) Business Days following the decision of the Environmental Arbitrator, Seller and Buyer shall execute and deliver joint written instructions to the Escrow Agent to release the Environmental Escrow Amount (or portion of such Environmental Escrow Amount) from the Cash Defect Escrow Account or Transfer Agent to release the number of shares of Parent Common Stock (using the value per share at which each such share was contributed) from the Stock Defect Escrow Account, as applicable, so determined to be owed to either Party with respect to the applicable dispute, in accordance with such decision. The costs and expenses of the Environmental Arbitrator shall be borne one half by Seller, on the one hand, and one half by Xxxxx, on the other hand. Notwithstanding anything to the contrary in this Agreement, any Oil & Gas Asset subject to dispute pursuant to this Section 4.5 shall be conveyed to Buyer (indirectly by virtue of conveying the Target

Interests) at Closing without adjustment to the Purchase Price and Xxxxx’s sole remedy with respect to any such dispute shall be any compensation from the Cash Defect Escrow Account or Stock Defect Escrow Account, as applicable, consistent with the Environmental Arbitrator’s decision.

Section 4.6 Limitations on Environmental Defects. Notwithstanding anything in this Agreement to the contrary:

(a) Buyer shall not have any right to assert, or recover for under this Agreement (and no adjustment to the Purchase Price shall be made pursuant to this Agreement for), any individual Environmental Defect with an Environmental Defect Amount less than $200,000 (the “Environmental Threshold Amount”); provided that, solely for purposes of determining whether or not the Environmental Defect Amount for any individual Environmental Defect exceeds the Environmental Threshold Amount and solely to the extent such Environmental Defect relates to a physical condition on or affecting the Oil & Gas Assets, the Environmental Defect Amount attributable to such Environmental Defect shall be aggregated with the Environmental Defect Amount(s) attributable to any other Environmental Defect(s) that arise out of the same release, event, incident or circumstance.

(b) the Parties agree that for purposes of calculating the Environmental Threshold Amount pursuant to Section 4.6(a), each Environmental Defect shall be treated as an individual event or occurrence; and

(c) there shall be no adjustment to the Purchase Price pursuant to this Agreement for any Environmental Defects unless and until the sum of each Environmental Defect Amount in excess of the Environmental Threshold Amount, exceeds the Environmental Deductible Amount, after which time Buyer shall be entitled to adjustments to the Purchase Price pursuant to this Agreement only for amounts in excess of the Environmental Deductible Amount.

Section 4.7 Exclusive Rights and Obligations. THE RIGHTS AND REMEDIES GRANTED TO BUYER IN THIS ARTICLE 4, THE RIGHTS AND REMEDIES OF BUYER PURSUANT TO SECTION 10.1(A) FOR ANY BREACH OF THE COMPANY’S REPRESENTATIONS AND WARRANTIES UNDER SECTION 7.16 OR SECTION 10.1(C) TO THE EXTENT ATTRIBUTABLE TO THE MATTERS DESCRIBED IN CLAUSE (B) OF THE DEFINITION OF SPECIFIED OBLIGATIONS, AND THE RIGHTS OF THE PARTIES PURSUANT TO SECTION 13.1(G) AND SECTION 13.1(H), ARE THE EXCLUSIVE RIGHTS AND REMEDIES AGAINST SELLER AND THE COMPANY RELATED TO ANY ENVIRONMENTAL LIABILITIES, ENVIRONMENTAL CONDITION, ENVIRONMENTAL DEFECT, OR LOSSES RELATED TO ANY ENVIRONMENTAL DEFECT, RELATING TO ANY ASSET OR PROPERTY OF THE COMPANY, INCLUDING THE OIL & GAS ASSETS. BUYER EXPRESSLY WAIVES, AND RELEASES THE SELLER INDEMNIFIED PARTIES FROM, ANY AND ALL OTHER RIGHTS AND REMEDIES IT MAY HAVE UNDER ENVIRONMENTAL LAWS AGAINST SELLER REGARDING ENVIRONMENTAL LIABILITIES, ENVIRONMENTAL CONDITION, ENVIRONMENTAL DEFECTS, WHETHER FOR CONTRIBUTION, INDEMNITY OR OTHERWISE. THE FOREGOING IS A SPECIFICALLY BARGAINED FOR ALLOCATION OF RISK AMONG THE PARTIES, WHICH THE PARTIES AGREE AND ACKNOWLEDGE SATISFIES THE EXPRESS NEGLIGENCE RULE AND CONSPICUOUSNESS REQUIREMENT UNDER TEXAS LAW.

ARTICLE 5
CASUALTY & CONDEMNATION

Section 5.1 Casualty and Condemnation. Subject to the other terms of this Article 5 and Section 13.1(g) and Section 13.1(h), if at any time after the Execution Date and prior to the Closing, any Oil & Gas Asset is (a) damaged or destroyed by casualty loss (not including normal wear and tear, downhole mechanical failure or reservoir changes) or (b) expropriated or taken into condemnation or under right of eminent domain (clauses (a) and (b) each, a “Casualty Loss”), the Parties shall nevertheless be required to consummate the Closing. At Closing, Seller shall contribute to the Company all sums paid to Seller or its Affiliates (other than the Company) by Third Parties by reason of any Casualty Losses insofar as with respect to the Oil & Gas Assets. Seller shall also assign, transfer and set over to the Company or subrogate the Company to all of Seller’s (and its Affiliates’, but excluding the Company’s)

right, title and interest (if any) in insurance claims, unpaid awards and other rights, in each case, against Third Parties arising out of such Casualty Losses insofar as with respect to the Oil & Gas Assets; provided, however, that Seller shall reserve and retain (and Buyer shall (and shall cause the Company to) assign to Seller) all right, title, and interest to any claims against Third Parties for the recovery of Seller’s costs and expenses (if any) incurred by Seller or the Company prior to Closing in pursuing or asserting any such insurance claims or other rights against Third Parties with respect to such Casualty Loss. Prior to the Closing, Seller shall give Buyer prompt notice of any Casualty Loss of which Seller obtains Knowledge (other than any Casualty Loss that is de minimis in nature), and Seller shall not voluntarily compromise, settle or adjust any amounts payable by reason of any Casualty Loss without first obtaining the written consent of Buyer, which consent may not be unreasonably withheld, conditioned or delayed. In the event that the Parties have failed to agree in good faith by the Closing on the Casualty Loss amount, such Casualty Loss amount will be determined by a single independent arbitrator (the “Casualty Arbitrator”) with relevant experience in accordance with the procedures set forth in Section 3.1(h) (including with respect to the selection of such arbitrator), mutatis mutandis.

ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SELLER

On the terms and subject to the conditions of this Agreement and except for any exceptions as set forth in the Schedules (with the applicability of such exceptions determined in accordance with Section 14.13 of this Agreement), Seller represents and warrants to Buyer as of the Execution Date and, effective upon the Closing, the Closing Date (except to the extent such representations and warranties speak to a specific date, in which case such representations and warranties shall be true and correct in all respects as of such date), as follows:

Section 6.1 Organization. Seller is duly organized, validly existing, and in good standing (or equivalent) under the Laws of the State of Delaware, and is duly qualified to do business in all jurisdictions in which the nature of its business makes such qualification or licensing necessary, except where the failure to be in good standing, individually or in the aggregate, has not been and would not reasonably be expected to be material to Seller.

Section 6.2 Authority. Seller has all requisite power and authority to execute and deliver this Agreement and the Related Agreements to which it is a party and to perform its obligations under this Agreement and the Related Agreements. The execution, delivery, and performance of this Agreement and the Related Agreements to which it is a party and the consummation of the transactions contemplated by this Agreement and the Related Agreements have been duly and validly authorized by all requisite action on the part of Seller.

Section 6.3 Enforceability. This Agreement and each Related Agreement to which Seller is a party has been, or at Closing will have been, duly and validly executed and delivered by Seller. Assuming that this Agreement and each Related Agreement has been duly and validly executed and delivered by the other parties, this Agreement and each Related Agreement constitutes, or when executed and delivered by Seller will constitute, a legal, valid, and binding agreement of Seller, enforceable against it in accordance with their terms, subject to: (a) applicable bankruptcy, insolvency, reorganization, moratorium, and other similar Laws of general application from time to time in effect that affect creditors’ rights generally; (b) general principles of equity; and (c) the power of a court to deny enforcement of remedies generally based upon public policy.

Section 6.4 Title to Target Interests. Seller is the direct and beneficial owner of the Target Interests, free and clear of all Liens (except for Liens arising under federal and state securities Laws, arising pursuant to the Governing Documents of the Company, imposed or created by Buyer or any of its Affiliates, or Liens for which releases will be obtained at or prior to the Closing).

Section 6.5 No Violation or Breach. Except as set forth on Schedule 6.5 and assuming receipt of all applicable consents required in connection with the consummation of the transactions contemplated by this Agreement, neither the execution and delivery of this Agreement nor the Related Agreements to which Seller is a party nor the consummation of the transactions and performance of the terms and conditions of this Agreement and Related Agreements by Seller will: (a) result in a violation or

breach of any provision of the Governing Documents of Seller; (b) violate or conflict with, or permit the cancellation, termination or acceleration by a Third Party of, or constitute a default (or an event that, with notice or lapse of time or both, would become a default) under, require any consent of any Person pursuant to, result in the termination or acceleration of the maturity of any obligation under, any Contract by which Seller is bound (other than, with respect to the consummation of the transactions contemplated by this Agreement, the Credit Documents); or (c) violate any Law applicable to Seller or its assets (including the Oil & Gas Assets), except in the case of clauses (b), and (c) above, where such violation, conflict, cancellation, termination, acceleration, default, consent, loss, increase, creation or imposition has not had, and would not reasonably be expected to have, a Company Material Adverse Effect.

Section 6.6 Brokerage Arrangements. Except as set forth on Schedule 6.6, Seller has not entered into (directly or indirectly) any Contract with any Person that would require the payment by the Company or Buyer of a commission, brokerage, or “finder’s fee,” or other similar fee in connection with this Agreement, the Related Agreements, or the transactions contemplated by this Agreement or the Related Agreements.

Section 6.7 Litigation. Neither Seller nor any of its assets are subject to any pending or, to Seller’s Knowledge, threatened (in writing) Proceeding at law or in equity or any order, injunction, judgment or decree of a Governmental Authority which would reasonably be expected to have the effect of restricting, making illegal or otherwise prohibiting (a) Seller’s ability to perform its obligations under this Agreement or the Related Agreements or (b) the consummation of the transactions contemplated by this Agreement and the Related Agreements.

Section 6.8 Bankruptcy. There are no bankruptcy, reorganization or arrangement Proceedings pending, being contemplated by or, to Seller’s Knowledge, threatened in writing against Seller or any of its Affiliates.

Section 6.9 Securities Matters.

(a) Seller, and each recipient of the Parent Common Stock comprising the Stock Consideration. is (i) an experienced and knowledgeable investor, (ii) able to bear the economic risks of the acquisition and ownership of the Parent Common Stock comprising the Stock Consideration, including any loss associated with such investment, (iii) capable of evaluating (and has evaluated) the merits and risks of investing in the Parent Common Stock comprising the Stock Consideration and its acquisition and ownership thereof, (iv) an “accredited investor,” as such term is defined in Regulation D of the Securities Act of 1933, as amended (the “Securities Act”) and (v) acquiring the Parent Common Stock comprising the Stock Consideration for its own account, for investment purposes only and not in connection with a distribution or resale of the Stock Consideration in violation of federal or state securities Laws and the rules and regulations under federal or state securities Laws. Seller and each such Person understands and accepts that the acquisition of the Parent Common Stock comprising the Stock Consideration involves various risks and uncertainties, many of which are summarized in Parent’s filings with the SEC. Seller and each such Person is familiar with the business and financial condition and operations of Parent, as described in Parent’s filings with the SEC. Seller and each such Person has had access to such information concerning Parent and the Parent Common Stock and confirms it has been offered the opportunity to ask questions of Parent and receive answers thereto as it deems necessary to enable it to make an informed investment decision concerning the acquisition of the Parent Common Stock.

(b) Subject to and without limiting any Buyer Party’s representations and warranties in Article 8 and Seller’s rights and remedies with respect to beaches thereof, and in reliance upon such representations and warranties and Parent’s SEC filings, with the assistance of Seller’s own professional advisors, to the extent that Seller has deemed appropriate, Seller has made its own legal, tax, accounting and financial evaluation of the merits and risks of an investment in the Parent Common Stock comprising the Stock Consideration. Seller, on behalf of itself and each such Person, confirms that it is not relying on any communication (written or oral) of the Buyer Parties or any of their Affiliates, as investment or tax advice or as a recommendation to acquire the Parent Common Stock comprising the Stock Consideration. It is understood that information and explanations related to the terms and conditions of the securities provided in this Agreement or otherwise by the Buyer Parties or any of their Affiliates will not be

considered investment or tax advice or a recommendation to acquire Parent’s securities, and that neither the Buyer Parties nor any of their Affiliates is acting or has acted as an advisor to Seller or any such Person in deciding to invest in Parent’s securities. In accepting the Parent Common Stock comprising the Stock Consideration, Seller, on behalf of itself and each such Person, has made its own independent decision that an investment in the Parent Common Stock comprising the Stock Consideration is suitable and appropriate for Seller.

(c) Seller, on behalf of itself and each such Person, acknowledges and understands that (i) the issuance of the Stock Consideration has not been registered under the Securities Act and such issuance will be made in reliance on an exemption therefrom and (ii) the Parent Common Stock comprising the Stock Consideration will, upon its issuance by Parent, be characterized as “restricted securities” under state and federal securities Laws. Seller, on behalf of itself and each such Person, agrees that the Parent Common Stock comprising the Stock Consideration may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of except pursuant to an effective registration statement under the Securities Act or pursuant to an available exemption from the registration requirements of the Securities Act, and in compliance with other applicable state and federal securities Laws.

ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

On the terms and subject to the conditions of this Agreement and except for any exceptions as set forth in the Schedules (with the applicability of such exceptions determined in accordance with Section 14.13 of this Agreement), the Company represents and warrants to Buyer as of the Execution Date and, effective upon the Closing, as of the Closing Date (except to the extent such representations and warranties speak to a specific date, in which case such representations and warranties shall be true and correct in all respects as of such date), as follows:

Section 7.1 Organization. The Company is a limited liability company duly formed, validly existing, and in good standing under the Laws of the State of Delaware. The Company has the requisite power and authority to own, lease and operate its properties, rights or assets, carry on its businesses as now being conducted, and to carry out the transactions contemplated by this Agreement. The Company is duly qualified or licensed to do business and in good standing (or equivalent) in each jurisdiction where the character of its business or the nature of its properties, rights, or assets makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not have a Company Material Adverse Effect.

Section 7.2 Authority. The Company has all requisite power and authority to execute and deliver this Agreement and the Related Agreements to which it is or will become a party and to perform its obligations under this Agreement and the Related Agreements. The execution, delivery, and performance of this Agreement and the Related Agreements to which it is or will be a party and the consummation of the transactions contemplated by this Agreement and the Related Agreements have been duly and validly authorized by all requisite action on the part of the Company.

Section 7.3 Enforceability. This Agreement and each Related Agreement to which the Company is a party has been duly and validly executed and delivered by the Company. Assuming that this Agreement and each Related Agreement has been duly and validly executed and delivered by the other parties, this Agreement and each Related Agreement constitutes a legal, valid, and binding agreement of the Company, enforceable against it in accordance with their terms, subject to: (a) applicable bankruptcy, insolvency, reorganization, moratorium, and other similar Laws of general application from time to time in effect that affect creditors’ rights generally; (b) general principles of equity; and (c) the power of a court to deny enforcement of remedies generally based upon public policy.

Section 7.4 Capitalization.

(a) The authorized Membership Interests of the Company consist solely of the Target Interests. All outstanding Membership Interests of the Company are duly authorized and validly issued. Except for the Target Interests, there are no outstanding: (i) Membership Interests or other voting

Securities of the Company; (ii) Securities of the Company or any other Person convertible into or exchangeable or exercisable for Membership Interests or other voting Securities of, or any other interest in, the Company; and (iii) subscriptions, options, warrants, calls, rights (including preemptive rights), equity appreciation, phantom equity, profit participation, redemption rights, commitments, understandings or agreements to which the Company is a party or by which it is bound obligating the Company to issue, grant, transfer, convey, assign, deliver, sell, purchase, redeem or acquire Membership Interests or other voting Securities of, or any other interest in, the Company (or Securities convertible into or exchangeable or exercisable for Membership Interests or other voting securities of, or any other interest in, the Company) or obligating the Company to grant, extend or enter into any such subscription, option, warrant, call, right, commitment, understanding or agreement.

(b) No Membership Interests of the Company have been reserved for issuance or issued in violation of, and none are subject to, any preemptive rights, purchase or call options, subscription rights, rights of first refusal or other similar rights except as set forth in the Governing Documents of the Company. At the Closing, there will be no member agreement, irrevocable proxies, voting trust or other agreement or understanding relating to the voting of any Membership Interests of the Company. There are, and there will be as of the Closing, no outstanding stock appreciation, phantom stock, profit participation or similar rights which are obligations of the Company. There are no bonds, debentures, notes or other indebtedness of the Company having the right to vote or consent (or, convertible into, or exchangeable for, Securities having the right to vote or consent) on any matters on which holders of Membership Interests of the Company may vote.

(c) The Company has no Subsidiaries and does not control or own, directly or indirectly, any Securities or interests in, or have any direct or indirect investments in, any Person.

(d) Prior to the Execution Date, the Company has made available to Buyer true and complete copies of the Governing Documents of the Company as of the Execution Date.

Section 7.5 No Violation or Breach. Except as set forth on Schedule 7.5, and assuming the receipt of all applicable consents required in connection with the consummation of the transactions contemplated by this Agreement, neither the execution and delivery of this Agreement nor the Related Agreements to which it is or will be a party nor the consummation of the transactions and performance of the terms and conditions of this Agreement and the Related Agreements by the Company will (with or without notice or lapse of time) (a) result in a violation or breach of any provision of the Governing Documents of the Company, (b) violate or conflict with, or permit the cancellation, termination or acceleration by a Third Party of, or constitute a default (or an event that, with notice or lapse of time or both, would become a default) under, require any consent of or notice to any Person pursuant to, result in the termination or acceleration of the maturity of any obligation under, any Contract by which the Company is bound (other than, with respect to the consummation of the transactions contemplated by this Agreement, the Credit Documents), (c) violate any Law applicable to the Company or (d) result in the creation or imposition of, any Lien, other than a Permitted Encumbrance, upon or with respect to the Company or the Oil & Gas Assets, except in the case of clauses (b) and (c) above, where such violation, conflict, cancellation, termination acceleration, default, consent, loss, increase, creation or imposition, individually or in the aggregate, has not had, and would not reasonably be expected to have, a Company Material Adverse Effect.

Section 7.6 Consents; Preferential Rights. Except as set forth on Schedule 7.6, (a) no consent, approval, authorization, or permit of, or filing with or notification to, any Person is required for or in connection with the execution and delivery of this Agreement and the Related Agreements to which it is or will be a party, by the Company or otherwise in connection with the consummation of the transactions contemplated by this Agreement or the Related Agreements and (b) there are no preferential rights, rights of first refusal, tag along rights or other similar rights that are applicable to the transfer of the Target Interests to Buyer or otherwise in connection with the consummation of transactions contemplated by this Agreement and the Related Agreements.

Section 7.7 Brokerage Arrangements. Except as set forth on Schedule 7.7, neither the Company nor any of its Affiliates has entered into (directly or indirectly) any Contract with any Person that would require the payment by the Company or Buyer of a commission, brokerage, or “finder’s fee,”

or other similar fee in connection with this Agreement, the Related Agreements, or the transactions contemplated by this Agreement or the Related Agreements.

Section 7.8 Litigation. Except as set forth on Schedule 7.8, (a) there is no Proceeding pending or, to the Company’s Knowledge, threatened in writing against the Company and (b) the Company is not subject to any order, injunction, judgment or decree of a Governmental Authority or arbitrator (i) with respect to the Company’s business or current or former assets (including the ownership and operation of the Oil & Gas Assets) or (ii) which would reasonably be expected to have the effect of restricting, making illegal or otherwise prohibiting the Company’s ability to perform its obligations under this Agreement or the Related Agreements or the consummation of the transactions contemplated by this Agreement and the Related Agreements. Notwithstanding the foregoing, the Company makes no representation or warranty as to any Proceedings (or any order, injunction, judgment or decree), including any state or federal rulemaking or similar proceedings by any Governmental Authority, which are, or contain issues, of broad applicability to, or which broadly affect, the Hydrocarbon exploration and production industry, other than any such actions, suits or proceedings in which the Company is a named party.

Section 7.9 Compliance with Laws. Except as set forth on Schedule 7.9, the Company is, and since July 1, 2021 has been, in compliance in all material respects with all applicable Laws. Since July 1, 2021, the Company has not received any written notice expressly alleging a material violation of Law from a Governmental Authority that remains unresolved as of the Execution Date. This Section 7.9 does not address any matter regarding Tax Laws, which are exclusively addressed in Section 7.12, or any matter regarding Environmental Laws, Environmental Permits or Environmental Liabilities, which are exclusively addressed in Section 7.16.

Section 7.10 Financial Statements.

(a) Schedule 7.10(a) sets forth copies of (collectively, the “Annual Financial Statements”) (i) Seller Parent’s audited consolidated balance sheet and related statements of operations; stockholders’ equity and cash flows for the fiscal year ended December 31, 2022 and (ii) Seller Parent’s unaudited consolidated balance sheet and related income statement and cash flow statement for the three (3)-month period ended March 31, 2023 (the “Interim Financial Statements”, and, together with the Annual Financial Statements, the “Financial Statements”).

(b) Except as set forth on Schedule 7.10(b), or as otherwise disclosed in the notes to Schedule 7.10(a), and subject in the case of the Interim Financial Statements, to the absence of footnotes and normal and recurring year-end adjustments, each Financial Statement presents fairly in all material respects the consolidated financial condition of Seller Parent and its Subsidiaries as of the respective dates of such Financial Statements and/or the consolidated operating results of Seller Parent and its Subsidiaries for the periods covered, in each case in conformity with GAAP in all material respects, consistently applied and without modification of the accounting principles used in the preparation thereof throughout the periods presented.

(c) The Company has no liabilities (including any Indebtedness, other than the Credit Document Indebtedness), except for (i) liabilities reflected (to the extent so reflected) and accrued for on the balance sheet in the Interim Financial Statements, (ii) liabilities incurred in the ordinary course of business since the date of the balance sheet in the Interim Financial Statements consistent with past practice, (iii) liabilities set forth on Schedule 7.10(c) or attributable to (A) the Assumed Xxxxxx, (B) the Credit Document Indebtedness or (C) the Company’s obligations pursuant to Section 2.6 of the Oasis PSA, or (iv) other liabilities that would not, individually or in the aggregate, reasonably be expected to be material to the Company.

(d) As of the Execution Date (i) the principal amount of the Credit Document Indebtedness is $220,000,000 and (ii) Seller’s good faith estimate of the amount of accrued unpaid interest attributable to the Credit Document Indebtedness is $3,824,366. At Closing, the Company will not have any Indebtedness other than the Credit Document Indebtedness.

Section 7.11 No Company Material Adverse Effect; Absence of Changes.

(a) Since December 31, 2022 (the “Balance Sheet Date”), there have not occurred any changes, events, circumstances, occurrences, effects or developments that have had, or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(b) Except as set forth on Schedule 7.11(b), since the Balance Sheet Date, other than in the ordinary course of business or in compliance with Section 9.1(a), the Company has not:

(i) made any material change in any method of accounting or accounting policies;

(ii) incurred or guaranteed any Indebtedness, except for (x) any Indebtedness incurred under existing credit facilities and (y) Indebtedness for which the Company will not be liable at or following Closing;

(iii) made any issuance, sale or disposition of equity securities or any other securities or grant of any options, warrants or other rights to subscribe for or purchase any equity securities or any other securities of the Company;

(iv) instituted or settled any material claim or lawsuit; or

(v) taken any other action that, if taken during the period commencing after the Execution Date and prior to the Closing Date, would require consent of Buyer pursuant to clauses (i), (ii), (iii), (v), (vi), (vii), (viii), (xi), (xii), (xiv), (xviii) and (xix) of Section 9.1(b).

Section 7.12 Taxes. Except as set forth on Schedule 7.12:

(a) All income Tax Returns and other material Tax Returns required to be filed by, or with respect to, the Company have been timely filed to the appropriate Governmental Authority and all such Tax Returns are accurate, complete and correct in all material respects.

(b) All Income Taxes and other material Taxes due and payable by the Company have timely been paid in full (whether or not set forth on a Tax Return).

(c) All Asset Taxes (and any other Taxes that could give rise to a Lien on any of the Oil & Gas Asset) (i) have been paid timely to the appropriate Governmental Authority or (ii) are being contested in good faith by appropriate proceeds for which adequate reserves have been made on the Financial Statements in accordance with GAAP and if so contested, are identified on Schedule 7.12.

(d) There is no Lien for Taxes, or relating to, Taxes burdening any of the Oil & Gas Assets (or the production of Hydrocarbons therefrom), other than Permitted Encumbrances.

(e) Neither Seller nor the Company is currently the beneficiary of an extension of time within which to file a Tax Return or pay any Tax of the Company or with respect to the Oil & Gas Assets.

(f) Neither Seller nor the Company has received written notice of any pending claim with respect to Asset Taxes, other Taxes of the Company, or Tax Returns of the Company (in each case, which remains unresolved), and there is no audit, litigation, or other proceeding (in each case, which remains unresolved) that has been asserted or proposed with respect to any such Taxes or Tax Returns, and to Seller’s Knowledge, no such audit, litigation or other proceeding has been threatened.

(g) The Company is not a party to or bound by any closing agreement, offer in compromise, gain recognition agreement, or other agreement with any Governmental Authority. No Tax ruling has been applied for or received by the Company.

(h) No claim that remains outstanding has been made by any Governmental Authority in any jurisdiction where the Company does not file Tax Returns that the Company is or may be subject to Tax by that jurisdiction.

(i) The Company is not a party to or bound by any tax indemnity, tax sharing, tax allocation, or other similar agreement.

(j) The Company does not have any liability for Taxes of any other Person under Section 1.1502-6 of the U.S. Treasury Regulations promulgated under the Code (or under any corresponding provision of state, local or non-U.S. income Tax Law), as transferee or successor, by contract or otherwise.

(k) The Company will not be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion of any taxable period) ending after the Closing Date as a result of: (i) an adjustment under either Section 481(a) of the Code (or any corresponding or similar provision of U.S. state or local or non-U.S. Law) by reason of a change in method of accounting occurring on or prior to the Closing Date for a taxable period ending on or prior to the Closing Date, (ii) a “closing agreement” described in Section 7121 of the Code (or any corresponding or similar provision of U.S. state or local or non-U.S. Law) executed on or prior to the Closing Date, (iii) an installment sale or open transaction disposition made on or prior to the Closing Date, (iv) the cash method of accounting or long-term contract method of accounting utilized on or prior to the Closing Date, (v) a prepaid amount received on or prior to the Closing Date, or (vi) any prepaid amount received or deferred revenue accrued on or prior to the Closing Date.

(l) The Company has not participated in or is participating in a “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).

(m) The Company has not, pursuant to the CARES Act (or the presidential memorandum regarding Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster signed on August 8, 2020 or IRS Notice 2020-65), claimed the employee retention credit under Section 2301 of the CARES Act or deferred any “applicable employment taxes” (as defined in Section 2301(c)(1) of the CARES Act).

(n) At all times on and subsequent to its date of formation, the Company has been properly classified as an entity disregarded as separate from its regarded owner for U.S. federal income tax purposes.

(o) The Company has not owned or otherwise held any direct or indirect interest (economic or otherwise) in any Person and no other Person is or has been treated as, or is or has been required to be treated as, a Subsidiary of the Company for U.S. federal income tax purposes.

(p) No Oil & Gas Asset is subject to any tax partnership agreement or provisions requiring a partnership Income Tax Return to be filed under Subchapter K of Chapter 1 of Subtitle A of the Code or any similar state statute (other than as a result of Seller’s indirect ownership of such Oil & Gas Asset).

Section 7.13 Contracts.

(a) As of the Execution Date, Schedule 7.13(a) sets forth the following Contracts to which the Company is a party to, or bound by (each, a “Material Contract”):

(i) any Contract for the sale, purchase, exchange or other disposition of Hydrocarbons which cannot be terminated by the Company on not greater than ninety (90) days’ notice;

(ii) any Contract evidencing Indebtedness (other than Indebtedness for which the Company will not be liable at or following Closing) or granting any Liens over any material asset of the Company (other than Permitted Encumbrances);

(iii) any Contract guaranteeing any obligation of another Person;

(iv) any Contract that expressly prohibits or materially restricts the Company from competing in any jurisdiction;

(v) any Contract that can reasonably be expected to result in aggregate payments or receipts of revenue by or on behalf of the Company of more than $1,000,000 during the current or any subsequent fiscal year or $5,000,000 in the aggregate over the term of such Contract (in each case, based solely on the terms of such Contract and without regard to any expected increase in volumes or revenues) that cannot be terminated by the Company on not greater than ninety (90) days’ notice, but expressly excluding customary joint operating agreements;

(vi) any participation agreement, joint development agreement, area of mutual interest agreement, joint operating agreement, unitization or communitization agreement, exploration agreement, data license agreement, seismic license agreement, or acreage dedication agreement, partnership agreements (including any tax partnership agreement), joint venture, farm-in agreement, farm-out agreement or exchange agreement, or any Contract similar to the foregoing where, in each case, the Company has any remaining material obligation (including any indemnity obligation owed by the Company) or, to the Company’s Knowledge, the Company (or its assets) are otherwise subject to any material restriction affecting the Company’s ownership, use or operation of its assets;

(vii) any Contract that relates to the acquisition or disposition of any material Oil & Gas Asset, with respect to which the Company has any material outstanding rights or obligations (excluding any indemnity obligations owed to or from the Company that customarily survive the closing of such transactions and for which no claim is currently pending);

(viii) any Contract for the marketing, gathering, treatment, processing, storage or transportation of Hydrocarbons, which are not cancelable without penalty or fee to the Company, its Affiliates, or its or their permitted successors and assigns, on ninety (90) days or less prior written notice, including (A) any Contracts containing any dedications of Oil & Gas Interests (of Hydrocarbons produced from or allocated thereto) for marketing, gathering, treatment, processing, storage or transportation activities or (B) any Contracts that contain any minimum volume, deliver, transportation, processing, production or throughput commitments, including any such Contract that requires the Company to pay a deficiency payment or similar obligation if the Company fails to satisfy such commitment;

(ix) any Contract containing any area of mutual interest, most favored nations, or other similar provision;

(x) any Contract which expressly limits or restricts the ability of the Company to make distributions or declare or pay dividends in respect of its Securities;

(xi) any Contract which is between the Company, on the one hand, and any of its respective officers, directors or principals (or any such Person’s Affiliates) or any Person that holds or owns five percent (5%) or more of the shares of the Company’s Securities (or any Affiliates of any such Person), on the other hand, except for employment, consulting, individual engagement, confidentiality, invention assignment, non-competition agreements or similar agreements entered into in the ordinary course of business;

(xii) any Contract which is a settlement, settlement agreement, or similar agreement with any Governmental Authority involving future performance by the Company after the date of this Agreement which is material to the Company;

(xiii) any Contract that is a drilling contract, rig contract or fracturing services contract and would obligate the Company to employ and pay for a drilling rig or frac fleet with respect to the Oil & Gas Assets after the Execution Date;

(xiv) any Contract obligating the Company to drill additional xxxxx after the Closing (excluding general obligations of the Company under any Lease to conduct additional development operations);

(xv) any stockholders, investors rights, registration rights or similar Contract;

(xvi) any Contract, the primary purpose of which is to provide for the indemnification of another Person;

(xvii) any Contract which is a settlement agreement that settles or resolves prior claims, disputes or litigation and that contains unfulfilled obligations on the Company that are material to the Company; or

(xviii) any Contract which commits the Company to enter into any of the foregoing.

(b) Except as set forth on Schedule 7.13(b), each Material Contract listed on Schedule 7.13(a) constitutes the legal, valid and binding obligation of the Company, on the one hand, and, to the Company’s Knowledge as of the Execution Date, against each other party to the Material Contract, subject to: (i) applicable bankruptcy, insolvency, reorganization, moratorium, and other similar Laws of general application from time to time in effect that affect creditors’ rights generally; (ii) general principles of equity; and (iii) the power of a court to deny enforcement of remedies generally based upon public policy.

(c) Except as disclosed on Schedule 7.13(c), the Company is not in violation or default in any material respect under any Material Contract and, to the Company’s Knowledge as of the Execution Date, no other Person, is in violation or default in any material respect under any Material Contract.

(d) Except as disclosed on Schedule 7.13(d), as of the Execution Date, all Material Contracts are in full force and effect in all material respects and there are no current written notices received by the Company of the exercise of any premature termination of any Material Contract.

(e) Prior to the Execution Date, true, correct, and complete copies of the Material Contracts (including all amendments, supplements, waivers or modifications thereto) in effect as of the Execution Date have been made available to Buyer.

(f) Schedule 7.13(f) sets forth all Hedge Contracts that were binding upon the Company, its Affiliates or the Oil & Gas Assets as of the Effective Time.

Section 7.14 Affiliate Arrangements. Except as set forth on Schedule 7.14 and in the Company’s Governing Documents, there are no Contracts between (a) the Company or any of its directors, managers, officers or employees, on the one hand and (b) Seller or its Affiliates (which, for the avoidance of doubt, does not include the Company for purposes of this Section 7.14) or any of their respective directors, managers, officers or employees, on the other hand. None of Seller or its Affiliates (which, for the avoidance of doubt, does not include the Company for purposes of this Section 7.14) or any of their respective directors, managers, officers or employees (i) owns any direct interest in any of the Oil & Gas Assets (other than interests held of record prior to the Execution Date) or (ii) is indebted to or, since July 1, 2021, has borrowed money from or lent money to, the Company (other than Indebtedness

that has been or will be discharged or extinguished at or prior to Closing) (any of the Contracts or arrangements described in this Section 7.14, collectively, “Affiliate Arrangements”).

Section 7.15 Permits. Except as set forth on Schedule 7.15, (a) the Company possesses all material Permits (other than Environmental Permits) required to own and operate the Oil & Gas Assets and to conduct its business as currently conducted, and (b) the Company is, and, to the Company’s Knowledge, any applicable Third Party operators are, in compliance in all material respects with all such Permits (other than Environmental Permits), and each such Permit is in full force and effect in all material respects. As of the Execution Date, the Company has not received any written notice from a Governmental Authority claiming the lack of a material Permit or default in any material respect under any Permit with respect to any Oil & Gas Asset operated by the Company that has not be previously cured, resolved or addressed. The execution and delivery of this Agreement or any Related Agreement and the consummation of the transactions contemplated hereby and thereby will not result in the revocation or termination of any such Permit or the imposition of any restrictions of such as nature as may limit, in any material respect, the operation or use of the Oil & Gas Assets as historically conducted. As of the Execution Date, there are no Proceedings to which the Company is a party with respect to any pending material modification, revocation, termination or suspension of any material Permit. Notwithstanding anything in this Section 7.15 to the contrary, this Section 7.15 does not address any matter with respect to Environmental Laws, Environmental Permits or Environmental Liabilities, which are exclusively addressed in Section 7.16.

Section 7.16 Environmental Matters. Except as set forth on Schedule 7.16, or has not had or as would not reasonably be expected to have a Company Material Adverse Effect, (a) the Company is not subject to any Proceedings under, or with respect to alleged violations of, any Environmental Law, whether pending or, to the Company’s Knowledge, threatened in writing, (b) since July 1, 2021, the Company has not received any written notice from any Person alleging a violation of or material non-compliance with any Environmental Laws with respect to the Company or any Oil & Gas Assets, the subject of which is unresolved and, to the Company’s Knowledge, the Oil & Gas Assets are currently in compliance with Environmental Laws in all material respects (other than any non-compliance that has been previously cured or otherwise resolved in accordance with applicable Environmental Laws), (c) the Company has not entered into any agreements or consents with any environmental Governmental Authority and is not subject to any order, decree or judgment issued against the Company or any of its Affiliates by an environmental Governmental Authority, in each case, in existence as of the Execution Date and based on any Environmental Laws that prevent the future use of Oil & Gas Assets in the same manner as their current use and (d) to the Company’s Knowledge, the Company has obtained and is in material compliance with all material Permits under applicable Environmental Laws required or necessary for its ownership of the Oil & Gas Assets as currently owned by the Company or any of its Affiliates. To the Company’s Knowledge, the ownership, operation and use of the Oil & Gas Assets and the performance of the Material Contracts are and since July 1, 2021 have been in material compliance with the terms of such Environmental Permits, and there is no Proceeding seeking the revocation, cancellation, or suspension of any such Environmental Permits. Copies of all final written reports of environmental site assessments and/or compliance audits by a Third Party on behalf of the Company or any of its Affiliates that are in the Company’s or any of its Affiliates’ possession or control, in each case, that have been prepared since July 1, 2021 have been, in each case, provided or made available to Buyer prior to the Execution Date. Notwithstanding anything in this Agreement to the contrary, the representations and warranties set forth in this Section 7.16 are the sole and exclusive representations and warranties with respect to environmental matters, including any arising in respect of Environmental Laws, Environmental Permits, Environmental Liabilities or Hazardous Materials.

Section 7.17 Insurance. As of the Execution Date, the Company (or Seller or its Affiliates on behalf of the Company) has in place policies of insurance in amounts and scope of coverage as set forth on Schedule 7.17, and each such policy is in full force and effect and all premiums are currently paid in accordance with the terms of such policy. As of the Execution Date, there are no material claims by the Company pending under any of such policies as to which coverage has been questioned, denied or disputed by the underwriters of such policies or in respect of which such underwriters have reserved their rights, other than ordinary course reservations of rights. As of the Execution Date, the Company has not received written notice of cancellation or, to the Company’s Knowledge, any threatened (in writing)

cancellation of any such insurance policies or any material premium increase or material alteration of coverage with respect to any such insurance policies.

Section 7.18 Imbalances. To the Company’s Knowledge, Schedule 7.18 sets forth all material production, transportation, plant or other Imbalances associated with the Oil & Gas Assets as of the date set forth on Schedule 7.18.

Section 7.19 Non-Consent Operations. Except as set forth on Schedule 7.19 (and solely to the extent not operated by the Company or an Affiliate, to the Company’s Knowledge), from July 1, 2021 through the Execution Date, no operations are being conducted or have been conducted with respect to the Oil & Gas Assets as to which the Company has elected to be a non-consenting party under the terms of the applicable operating agreement and with respect to which the Company has not yet recovered its full participation.

Section 7.20 Current Commitments. Schedule 7.20 sets forth, as of the Execution Date, all Applicable AFEs that are equal to or in excess of $500,000, net to the interest of the Company. The aggregate amount of Applicable AFEs that (a) are equal to or greater than $250,000 but less than or equal to $500,000, in each case, net to the interest of the Company and (b) are not listed on Schedule 7.20 as of the Execution Date is less than or equal to $2,000,000, net to the interest of the Company.

Section 7.21 Suspense Funds. To the Company’s Knowledge, Schedule 7.21 lists all Suspense Funds as of the date set forth on Schedule 7.21. To the Company’s Knowledge, except as withheld in the ordinary course of business, all proceeds from the sale of Hydrocarbons produced from the Oil & Gas Assets are being received by the Company in a timely manner and are not being held in suspense (other than any statutory minimum royalties or de minimis amounts).

Section 7.22 Payout Balances. To the Company’s Knowledge, Schedule 7.22 contains a list of the status as of the date(s) set forth in such Schedule, of any “payout” balance for the Xxxxx listed on Annex A-2 that are subject to a reversion or other adjustment at some level of cost recovery or payout (or passage of time or other event other than termination of a Lease by its terms).

Section 7.23 Royalties and Working Interest Payments. Except (a) as set forth on Schedule 7.23 and (b) for the Suspense Funds, to the Company’s Knowledge, since July 1, 2021, the Company has properly and timely paid, or caused to be paid, in all material respects, all royalties, overriding royalties, production payments, net profits interests and other similar burdens upon, measured by, or payable out of production and other interest owners’ revenues or proceeds attributable to sales of Hydrocarbons produced from or attributable to the Oil & Gas Assets in accordance with the applicable Leases and applicable Laws.

Section 7.24 Officers and Bank Accounts. Schedule 7.24 lists all of the officers, directors, managers, bank accounts (including all deposit, demand, time, savings, passbook, security or similar accounts maintained by the Company with any bank or financial institution, the “Bank Accounts”), safety deposit boxes and lock boxes (designating each authorized signatory) of the Company.

Section 7.25 Employee Matters; Available Employees.

(a) The Company does not and has never employed or engaged any employees or other service providers and no employees or other services providers, including any Available Employees, have provided services for or on behalf of the Company as of the date hereof. The Company does not maintain, sponsor or contribute to any Employee Benefit Plan.

(b) To the extent applicable to the Available Employees, Seller and its Affiliates are and have been in compliance in all material respects with: (i) all applicable employment Laws and agreements regarding hiring, employment, termination of employment, plant closings and mass layoffs, employment discrimination, harassment, retaliation, and reasonable accommodation, leaves of absence, terms and conditions of employment, wages and hours of work, employee classification, employee health and safety, engagement and classification of independent contractors, payroll taxes, and immigration with respect to all employees, independent contractors, and contingent workers; and (ii) all applicable Laws

relating to the relations between it and any labor organization, trade union, work council, or other body representing employees of Seller or its Affiliates.

Section 7.26 Bankruptcy. There are no bankruptcy, reorganization or arrangement Proceedings pending, being contemplated by or, to the Company’s Knowledge, threatened in writing against the Company or any of its Affiliates.

Section 7.27 Credit Support Obligations. Schedule 9.9 sets forth (a) a complete and accurate list of all Credit Support provided by the Company, or by Seller on behalf of the Company, as of the Execution Date, in support of the obligations of the Company to any Governmental Authority, contract counterparty, or other Person related to the ownership or operation of the Oil & Gas Assets and (b) any other sinking funds, reserves, escrows, cash deposits, financial instruments, surety agreements and similar agreements, guarantees and other items of credit support that the Company is liable for or that are binding on any of the Oil & Gas Assets, including, in each case of clause (a) and (b), the type and amount of such credit support and the date such credit support was provided.

Section 7.28 Leases. Except as set forth on Schedule 7.28, or for any frivolous or immaterial claims with respect to the applicable Lease, since July 1, 2021, the Company has not received an unresolved written notice from any lessor under any Lease asserting (a) that any payment required under the Leases has not been paid by the Company and, as a result thereof, the applicable Lease has terminated or is terminable or (b) that an event has occurred which constitutes (or with notice or lapse of time, or both, would constitute) a material breach under any Lease. Except as set forth on Schedule 7.28, as of the Execution Date, neither the Company nor any of its Affiliates has received any unresolved written notice seeking to terminate any Lease. To the Company’s Knowledge, (i) no party to any Lease or any successor to the interest of such party has filed, or has threatened in writing to file, any action to terminate, cancel, rescind or procure judicial reformation of any such Lease and (ii) there are no express unfulfilled drilling obligations under any of the Leases (excluding (A) any drilling obligation necessary to extend such Lease beyond its primary term, (B) requirements under that certain Continuous Development Agreement dated January 1, 2018 by and between Forge Energy, LLC and the Board for Lease for University Lands that pertains to certain of the Leases, as amended from time to time, and the terms of any such Leases and (C) customary Xxxx clauses).

Section 7.29 Casualty; Condemnation. As of the Execution Date, to the Company’s Knowledge, no taking (whether permanent, temporary, whole or partial) is pending or threatened (in writing) with respect to any part of the Oil & Gas Assets by reason of condemnation or the threat of condemnation or eminent domain. Since the Effective Time there have been no Casualty Losses with respect to any of the Company’s assets with damages estimated to exceed $1,000,000 net to the interest of the Company.

Section 7.30 Xxxxx. Except as set forth on Schedule 7.30, and, with respect to any Well not operated by the Company, to the Company’s Knowledge, (a) all Xxxxx have been drilled and completed within the geographic limits permitted by all applicable Leases, (b) no Well is subject to material penalties on allowables after the Effective Time because of any overproduction or any other violation of Laws and (c) there is no Well operated by the Company with respect to which there is an order from a Governmental Authority requiring that such Well be plugged and abandoned. To the Company’s Knowledge, no Well has been plugged and abandoned in a manner that does not comply in all material respects with applicable Law.

Section 7.31 Payments for Production. Except as set forth on Schedule 7.31 as of the dates set forth on Schedule 7.31, the Company is not obligated by virtue of a take-or-pay payment, advance payment, or other similar payment (other than (a) royalties, overriding royalties, similar arrangements established in the Leases, (b) Imbalances set forth on Schedule 7.18, (c) gas balancing agreements, (d) rights of any lessor to take free gas under the terms of the relevant Lease for its use on the lands covered thereby, (e) non-consent provisions in the Contracts or (f) other agreements relating to any of the foregoing), to deliver Hydrocarbons, or proceeds from the sale thereof, attributable to the Company’s or any of its Affiliates’ interest in the Oil & Gas Assets at some future time without receiving payment therefor at or after the time of delivery.

Section 7.32 Special Warranty of Defensible Title. Subject to the Permitted Encumbrances, the Company has Defensible Title to and will defend Defensible Title to the Leases and Xxxxx against every Person whomsoever lawfully claiming or purporting to claim the same or any part thereof, in each case, by, through and under the Company or any of its Affiliates but not otherwise. The Parties acknowledge and agree that the foregoing warranty shall constitute and be considered a special warranty of title by, through and under the Company and its Affiliates under applicable laws (and not a general warranty of title).

Section 7.33 Equipment. Except in each case as has not been and would not reasonably be expected to be material to the Company, and, without regard to materiality, to the Company’s Knowledge: (a) all of the Equipment is in an operable state of repair adequate to maintain normal operations as currently conducted by the Company, in all material respects, ordinary wear and tear excepted and (b) the Company has all easements, rights of way, licenses and authorizations, in each case, that are necessary to access, own and operate the Equipment as currently accessed, owned and operated by the Company.

Section 7.34 Surface Interests. Except as set forth on Schedule 7.34, (a) the Surface Interests and surface rights under the Leases are sufficient in all material respects for the operation of the Oil & Gas Assets operated by the Company or its Affiliates as currently operated by the Company or its Affiliates, (b) neither the Company nor any of its Affiliates is in material breach of or in material default under any Surface Interest, (c) as of the Execution Date, no written notice of material default or material breach has been received or delivered by the Company or any Affiliate of the Company under any Surface Interest, the resolution of which is currently outstanding, and no currently effective written notices have been received by the Company or any of its Affiliates of the exercise, intended exercise or threatened exercise of any premature termination of or under any Surface Interest and (d) to the Company’s Knowledge, each of the Surface Interests is in full force and effect.

Section 7.35 Cyber Security and Privacy. Since July 1, 2021, the Company has not experienced a security breach of its information technology systems or has breached its cybersecurity or privacy programs, in each case, except as would not, individually or in the aggregate, reasonably be expected to be material to the Company, taken as a whole. Since July 1, 2021, there have been no claims, assertions or investigations pending or, to the Company’s Knowledge, threatened in writing made by or against the Company regarding cybersecurity or privacy matters.

ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF THE BUYER PARTIES

On the terms and subject to the conditions of this Agreement and except for any exceptions as set forth in the Schedules (with the applicability of such exceptions determined in accordance with Section 14.12(a) of this Agreement), Buyer, with respect to itself only, and Parent, with respect to itself only, as applicable, represents and warrants to Seller and the Company as of the Execution Date and, effective upon the Closing, the Closing Date (except to the extent such representations and warranties speak to a specific date, in which case such representations and warranties shall be true and correct in all respects as of such date), as follows:

Section 8.1 Organization. Buyer is a corporation duly organized, validly existing, and in good standing (or equivalent) under the Laws of Delaware and has the requisite corporate power to carry on its business as now being conducted. Buyer has all requisite power and authority to own, lease and operate its properties, rights or assets, carry on its businesses as now being conducted, and to carry out the transactions contemplated by this Agreement. Parent is a Delaware corporation and duly organized, validly existing, and in good standing under the laws of the State of Delaware and, where required, is duly qualified to do business and is in good standing in each jurisdiction in which the Oil & Gas Assets are located.

Section 8.2 Authority. Buyer has all requisite power and authority to execute and deliver this Agreement and the Related Agreements to which it is a party and to perform its obligations under this Agreement and the Related Agreements. The execution, delivery, and performance of this Agreement and the Related Agreements have been duly and validly authorized by all necessary company action on the

part of Buyer and Parent, and at the Closing, all instruments executed and delivered by Buyer or Parent at or in connection with the Closing (collectively, the “Buyer Parties’ Closing Documents”) shall have been duly and validly authorized by all necessary company action on the part of the applicable Buyer Party thereto. This Agreement has been duly executed and delivered by Xxxxx and Parent and, at the Closing, all Buyer Parties’ Closing Documents shall have been duly executed and delivered by the applicable Buyer Party thereto.

Section 8.3 Enforceability. This Agreement and each Related Agreement constitutes a legal, valid and binding agreement of Buyer and Parent, enforceable against Buyer and Parent, as applicable, in accordance with its terms, subject to (a) applicable bankruptcy, insolvency, reorganization, moratorium, and other similar Laws of general application from time to time in effect that affect creditors’ rights generally, (b) general principles of equity and (c) the power of a court to deny enforcement of remedies generally based upon public policy.

Section 8.4 No Violation or Breach. Assuming receipt of all applicable consents required in connection with the consummation of the transactions contemplated by this Agreement, neither the execution and delivery of this Agreement and the Buyer Parties’ Closing Documents by Buyer or Parent, as applicable, nor the consummation of the transactions and performance of the terms and conditions of this Agreement or the Related Agreements by Buyer or Parent, directly or indirectly, will (a) result in a violation or breach of any provision of the Governing Documents of such Buyer Party, (b) violate or conflict with, or permit the cancellation, termination or acceleration by a Third Party of, or constitute a default (or an event that, with notice or lapse of time or both, would become a default) under, require any consent of any Person pursuant to, result in the termination or acceleration of the maturity of any obligation under, any Contract by which such Buyer Party is bound, (c) violate any Law applicable to such Buyer Party or the assets of such Buyer Party, (d) result in or require the creation or imposition of any Lien upon or with respect to any property or assets of such Buyer Party or (e) require any filing with, notification of or consent, approval or authorization of any Governmental Authority, other than those that have been or will be made prior to Closing, except in the case of clauses (b), (c), (d) and (e) above, where such violation, conflict, cancellation, termination, acceleration, default, consent, loss, increase, creation or imposition, individually or in the aggregate, has not had, and would not reasonably be expected to have, a Parent Material Adverse Effect.

Section 8.5 Consents. Except for (a) any filings that have been made, or will be made, pursuant to the rules and regulations of the NYSE in order to cause the shares of Parent Common Stock to be listed thereon, and (b) any post-Closing filings pursuant to the Registration Rights Agreement or applicable federal and state securities Laws which the applicable Buyer Party undertakes to file or obtain within the applicable time period, in each case to the extent required, Buyer is not and shall not be required to give any notice to or obtain any consent, approval, authorization, or permit of, or filing with or notification to, any Person in connection with the execution and delivery of this Agreement by Buyer (or any Related Agreement to which Buyer is or will be a party) or for or in connection with the consummation of the transactions and performance of the terms and conditions contemplated by this Agreement and the Related Agreements.

Section 8.6 Litigation. Neither such Buyer Party nor any of their respective assets is subject to any pending or, to Buyer’s Knowledge, threatened (in writing) Proceeding at law or in equity or any order, injunction, judgment or decree of a Governmental Authority which could reasonably be expected to have the effect of restricting, making illegal or otherwise prohibiting (a) such Buyer Party’s ability to perform its obligations under this Agreement or the Related Agreements or (b) the consummation of the transactions contemplated by this Agreement and the Related Agreements.

Section 8.7 Bankruptcy. There are no bankruptcy, reorganization or arrangement Proceedings pending, being contemplated by or, to Xxxxx’s Knowledge, threatened in writing against such Buyer Party or any of its Affiliates.

Section 8.8 Brokerage Arrangements. None of Buyer, Parent or any of their respective Affiliates have entered into (directly or indirectly) any Contract with any Person that would require the payment by Seller, the Company or any of their respective Affiliates of a commission, brokerage,

“finder’s fee” or other similar fee in connection with this Agreement, the Related Agreements or the transactions contemplated by this Agreement or the Related Agreements.

Section 8.9 Securities Matters. Buyer acknowledges and represents and warrants that (a) it is an “accredited investor,” as such term is defined in Regulation D of the Securities Act and (b) it is acquiring the Target Interests for its own account, for investment purposes only and not in connection with a distribution or resale of the Target Interests in violation of federal or state securities Laws and the rules and regulations under federal or state securities Laws. Buyer acknowledges and understands that (x) the acquisition of the Target Interests has not been registered under the Securities Act in reliance on an exemption therefrom and (y) that the Target Interests will, upon its sale by Buyer, be characterized as “restricted securities” under state and federal securities Laws. Xxxxx agrees that the Target Interests may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of except pursuant to an effective registration statement under the Securities Act or pursuant to an available exemption from the registration requirements of the Securities Act, and in compliance with other applicable state and federal securities Laws.

Section 8.10 Buyer’s Independent Investigation.

(a) Prior to executing this Agreement, Buyer has (or its Representatives) have been afforded the opportunity to examine and evaluate such materials as it has requested to be made available to it by Seller or Seller’s Representatives and to discuss with Seller and Seller’s Representatives such materials and the business and affairs of the Company and the nature of the Oil & Gas Asset. Prior to Closing and assuming Seller’s compliance with the terms of Section 3.1(a) and Section 4.2, Buyer has (or its Representatives have) (i) been afforded an opportunity to (A) examine and evaluate the business and affairs of the Company and the Oil & Gas Assets and such materials as it has requested to be made available to it by Seller or Seller’s Representatives and (B) discuss with Seller and its Representatives such materials and the business and affairs of the Company and the nature of the Oil & Gas Assets and (ii) satisfied itself through its own due diligence as to the condition of, and contractual arrangements and regulatory and other matters affecting or relating to, business and affairs of the Company and the Oil &Gas Assets.

(b) Buyer is (or its Representatives are) (i) sophisticated in the investigation, inspection, evaluation, review, purchase and ownership of oil and gas properties and related interests, including those located in the areas where the Oil & Gas Assets are located and (ii) a party capable of making such investigation, inspection, evaluation and review of the Company and the Oil & Gas Assets as a reasonably prudent purchaser would deem appropriate under the circumstances with respect to all matters relating to the Company and the Oil & Gas Assets, including their value, operation and suitability.

(c) In making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, Xxxxx has relied solely on the express representations of Seller and the Company set forth in Article 6 and Article 7 of this Agreement and any other express representations of Seller and the Company in any of the Related Agreements, its independent investigation of, and judgment with respect to, the Company and the Oil& Gas Assets and the advice of its own Representatives and not been induced by and has not relied on (and Buyer expressly acknowledges that it is not entitled to rely on) any comments, statements or information (whether written or oral or express or implied) provided by or on behalf of Seller or any Representative of Seller.

(d) Buyer acknowledges and agrees that (i) the due diligence information includes certain projections, estimates and other forecasts, and certain business plan information, (ii) there are uncertainties inherent in attempting to make such projections, estimates and other forecasts and plans and Buyer is familiar with such uncertainties and (iii) Buyer is taking full responsibility for making its own evaluation of the adequacy and accuracy of all projections, estimates and other forecasts and plans so furnished to it and any use of or reliance by Buyer on such projections, estimates and other forecasts and plans shall be at its sole risk.

Section 8.11 Funds. At Closing, Buyer shall have sufficient cash, available lines of credit or other sources of immediately available funds to enable it to pay the amounts due at the Closing, including the Cash Purchase Price, to Seller, the Payoff Amount pursuant to Section 2.2 and Section 2.12, and to

pay any supplemental payment required under Section 2.7, and to pay all of Buyer’s and its Affiliates’ fees and expenses associated with the transactions contemplated in this Agreement. Xxxxx acknowledges and agrees that the obligations of Buyer under this Agreement and the Related Agreements are not in any way contingent upon or otherwise subject to Buyer’s consummation of any financing arrangement or obtaining any financing or the availability, grant, provision or extension of any financing to Buyer.

Section 8.12 Parent Common Stock. The shares of Parent Common Stock to be delivered as the Stock Consideration have been duly authorized by Parent and, when issued and delivered pursuant to this Agreement in accordance with the terms hereof, will be validly issued, fully paid and non-assessable. Upon the issuance and delivery of the Stock Consideration as provided in this Agreement, Seller will acquire good and marketable title thereto, free and clear of any Liens (excluding (a) the restrictions imposed by this Agreement or the other transaction documents contemplated by this Agreement, (b) restrictions on transfer under applicable state and federal securities Laws and (c) any Liens created by or related to Seller). In addition, all actions required to be taken by Parent to issue the Stock Consideration to Buyer have been taken (or shall have been taken by or before the Closing). There are not, and as of the Closing Date, will not be, any preemptive or other rights to subscribe for or purchase the shares of Parent Common Stock to be issued and delivered as the Stock Consideration.

Section 8.13 Capitalization.

(a) As of the Execution Date, the authorized capital stock of Parent consist solely of (a) 130,000,000 shares of Parent Common Stock, of which 61,869,812 shares of common stock are issued and outstanding as of April 28, 2023, and (b) 2,500,000 shares of preferred stock, $0.01 par value per share, of which no shares are issued and outstanding.

(b) Except as contemplated by this Agreement, as disclosed in the Parent SEC Documents and for equity awards made pursuant to plans described in the Parent SEC Documents, as of the Execution Date, there are no preemptive rights or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, subscription agreements, commitments or rights of any kind that obligate Parent to issue or sell any equity interests of Parent or any securities or obligations convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any equity interests in Parent, and no securities or obligations evidencing such rights are authorized, issued or outstanding.

(c) As of the Execution Date, Parent does not have any outstanding bonds, debentures, notes, or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the holders of equity interests in Parent on any matter.

Section 8.14 SEC Documents; Financial Statements.

(a) Parent has timely filed or furnished all reports, schedules, forms, statements, prospectuses and other documents required to be so filed or furnished by it with the SEC since January 1, 2023 (collectively, the “Parent SEC Documents”). The Parent SEC Documents, including any audited or unaudited financial statements and any notes thereto or schedules included therein (the “Parent Financial Statements”), at the time filed or furnished (except to the extent corrected by a subsequently filed or furnished Parent SEC Document filed or furnished prior to the Execution Date) (i) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein (in the light of the circumstances under which they were made) not misleading, (ii) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as applicable, (iii) in the case of the Parent Financial Statements, complied as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, (iv) in the case of the Parent Financial Statements, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto, the omission of notes to the extent permitted by Regulation S-K or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) and subject, in the case of interim financial statements, to normal year-end adjustments, and (v) in the case of the Parent Financial Statements, fairly present in all material respects the consolidated financial condition, results of

operations, and cash flows of the Buyer Parties and their Subsidiaries as of the dates and for the periods indicated therein.

(b) The Buyer Parties and their Subsidiaries have no liabilities (including any Indebtedness), except for (i) liabilities reflected (to the extent so reflected) and accrued for on the balance sheet in the Parent Financial Statements, (ii) liabilities incurred in the ordinary course of business since the date of the balance sheet in the Parent Financial Statements consistent with past practice, (iii) liabilities under this Agreement and the other transaction documents contemplated by this Agreement, or (iv) other liabilities that would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect.

Section 8.15 Internal Controls; Listing Exchange.

(a) Parent maintains and has maintained effective internal control over financial reporting (as defined in Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act. Parent’s management has completed an assessment of the effectiveness of Parent’s internal control over financial reporting in compliance with the requirements of Section 404 of the Xxxxxxxx-Xxxxx Act for the year ended December 31, 2022, and such assessment concluded that such controls were effective.

(b) Parent has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act, such disclosure controls and procedures are reasonably designed to ensure that all material information required to be disclosed by Parent in the reports it files or submits to the SEC under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that all such material information is accumulated and communicated to Parent’s management as appropriate to allow timely decisions regarding required disclosure.

(c) Except where the failure to be in compliance has not had, and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, since January 1, 2022, (i) none of Parent or any Subsidiary of Parent nor, to the knowledge of Parent, any director, officer, employee, auditor, accountant or Representative of Parent or any Subsidiary of Parent, has received or otherwise had or obtained knowledge of any complaint, allegation, assertion or claim, whether written or oral, regarding accounting, internal accounting controls or auditing practices, procedures, methodologies or methods of Parent or any Subsidiary of Parent or any concerns from employees of Parent or any Subsidiary of Parent regarding questionable accounting or auditing matters with respect to Parent or any Subsidiary of Parent.

(d) Each of Parent and, to Parent’s knowledge, each of Parent’s directors and officers, in their capacities as such, are in compliance in all material respects with the provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations promulgated in connection therewith.

(e) The Parent Common Stock is listed on the NYSE, and Parent has not received any notice of delisting. No judgment, order, ruling, decree, injunction, or award of any securities commission or similar securities regulatory authority or any other Governmental Authority, or of the NYSE, preventing or suspending trading in any securities of Parent has been issued, and no proceedings for such purpose are, to Buyer’s Knowledge, pending, contemplated or threatened.

Section 8.16 Form S-3. Parent is eligible to register the resale of the Parent Common Stock comprising the Stock Consideration for resale by Seller under Form S-3 promulgated under the Securities Act.

Section 8.17 Investment Company. None of Buyer, Parent or any of their respective Subsidiaries is now, and after the issuance and sale of the Stock Consideration will be, an “investment company” or a company “controlled by” an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

Section 8.18 Securities Laws. The solicitation of offers and the sale of the Target Interests by Seller have not been registered under any securities Laws. At no time have the Buyer Parties been presented with or solicited by or through any public promotion or any form of advertising in connection with the transactions contemplated by this Agreement.

Section 8.19 Absence of Certain Changes. Since January 1, 2022, (a) there has not been any (i) material write-down by Parent in the reserves estimated for its oil and gas properties, other than write-downs resulting from depletion in the ordinary course of operation of such properties or that result from the variance in markets or prices for Hydrocarbons produced from such properties, (ii) material destruction, damage or loss to or affecting any of the assets of Parent or its Subsidiaries, or (iii) Parent Material Adverse Effect or any event, condition, change, development, circumstance or set of facts that, individually or in the aggregate, would reasonably be expected to have a Parent Material Adverse Effect and (b) Parent and its Subsidiaries have, in all material respects, conducted their business in the ordinary course of business consistent with past practices.

ARTICLE 9
ADDITIONAL AGREEMENTS AND COVENANTS

Section 9.1 Interim Covenants; Site Access.

(a) Affirmative Covenants of the Company. From the Execution Date until the Closing Date (or, if earlier, the date this Agreement is terminated pursuant to Section 13.1), except as otherwise contemplated or permitted by this Agreement, Seller shall, and shall cause the Company to:

(i) conduct its business and operate the Oil & Gas Assets (A) in the ordinary course in all material respects, consistent with past practices and subject to the terms of this Agreement, subject to interruptions resulting from force majeure, mechanical breakdown, or planned maintenance and (B) in accordance with all applicable Laws;

(ii) pay when due all Royalties, Property Costs and other payments that become due and payable in connection with the Oil & Gas Assets in the ordinary course in all material respects, consistent with past practices and subject to the terms of this Agreement;

(iii) maintain the books of account and records of the Company relating to the Oil & Gas Assets in the usual, regular and ordinary manner in all material respects, in accordance with its usual accounting practices;

(iv) without limiting Section 9.1(b), use commercially reasonable efforts to keep Buyer apprised of any drilling, re-drilling or completion operations proposed or conducted by the Company or its Affiliates with respect to the Oil & Gas Assets;

(v) use its commercially reasonable efforts to keep available the services of their current officers and key employees and preserve in all material respects the present relationships with creditors, customers and suppliers, in each case, of the Company (provided, however, that such obligation shall not require any financial concessions to such individuals or entities);

(vi) use its commercially reasonable efforts to maintain all material Permits which have been maintained by the Company as of the Execution Date (if any) in effect that are necessary or required to operate the Oil & Gas Assets that are currently operated by the Company or otherwise necessary or required in connection with the ownership of the Oil & Gas Assets;

(vii) provide Buyer with a copy of any other material notices received from any Governmental Authority pertaining to the Oil & Gas Assets or the Company;

(viii) not agree, whether in writing or otherwise, to enter into any agreement or commitment that would require the Company to act in a manner inconsistent with the foregoing; and

(ix) promptly upon obtaining Knowledge of the same, provide Buyer with notice of an invalidation, breach, or premature termination following the Execution Date of any Material Contract.

(b) Negative Covenants of the Company. Without limiting the foregoing, except (i) as required by Law, (ii) for operations covered by AFEs described on Schedule 7.20, (iii) ordinary course leasing activities, (iv) for matters described on Schedule 9.1, (v) for any COVID-19 Measures, (vi) as consented to in writing (including by email in accordance with Section 14.1) by Buyer (which consent may be withheld in Buyer’s sole discretion, except with respect to clauses (xi), (xix) and (xxi) (but only to the extent relating to clauses (xi) and (xix)), which consent in respect thereof shall not be unreasonably withheld, conditioned or delayed), from the Execution Date until the Closing Date (or, if earlier, the date this Agreement is terminated pursuant to Section 13.1), or (vii) as expressly permitted or required under this Agreement, Seller shall not (and shall cause the Company to not):

(i) (A) split, combine, subdivide or reclassify any Target Interests or (B) redeem or repurchase any Target Interests or any outstanding options, warrants or rights of any kind to acquire any Target Interests, or any outstanding Securities that are convertible into or exchangeable for any Target Interests;

(ii) adopt any amendments to the Governing Documents of the Company;

(iii) other than inventory and other assets acquired in the ordinary course of business, acquire properties or assets, including stock or other equity interests of another Person, with a value in excess of $100,000 individually or $500,000 in the aggregate, whether through asset purchase, merger, consolidation, share exchange, business combination or otherwise;

(iv) acquire any corporation, partnership, limited liability company, other business organization, or division thereof, or enter into any joint venture, strategic alliance, exclusive dealing, noncompetition, or similar contract or arrangement;

(v) sell, transfer, mortgage, pledge or dispose of any material portion of the Oil & Gas Assets or any of the Company’s material assets, including by way of non-cash distributions to any Person, other than (A) the Specified Inventory, (B) inventory, spare parts, or equipment that is no longer necessary in the operation of the Oil & Gas Assets or for which replacement equipment of equal or greater value has been obtained or (C) the sale of Hydrocarbons produced from the Oil & Gas Assets, in each case, in the ordinary course of business;

(vi) (A) incur any material Taxes outside the ordinary course of business of the Company, (B) make, revoke, or modify any material election related to Taxes, (C) settle, concede, or compromise any material liability related to Taxes, (D) change or otherwise alter the fiscal year of the Company, any material matter related to Tax accounting, or any method of Tax accounting, (E) file any material amended Tax Return or any amendment or other modification to any Tax Return, (F) enter into any closing agreement (as defined in Section 7121 of the Code) or any other material agreement relating to Taxes, (G) enter into any voluntary disclosure agreement or program with any Governmental Authority, (H) settle, compromise, concede, or abandon any material Tax claim or assessment, (I) surrender any right to claim a refund of material Taxes, or (J) consent to any extension or waiver of the limitation period applicable to any Tax, Tax claim, or Tax assessment;

(vii) adopt a plan of complete or partial liquidation or dissolution;

(viii) change any accounting methods, except as required by changes in GAAP or Law, or as recommended by its independent accountants;

(ix) agree to, or propose any operations on the Oil & Gas Assets anticipated to cost (net to the Oil & Gas Assets) in excess of $250,000 per operation, except that with respect to emergency operations, the Company shall notify Buyer of such emergency as soon as reasonably practicable following receipt of written notice from any Third Party operator;

(x) elect to not participate in or make a non-consent election in respect of any operations on the Oil & Gas Assets proposed by a Third Party anticipated to cost (net to the Oil & Gas Assets) in excess of $250,000 per operation (provided that, for the avoidance of doubt, if Buyer does not elect for the Company to participate in such an operation within the ten (10) day time period described in this Section 9.1(b), the Company may elect to not participate in or make a non-consent election in respect of such operation);

(xi) enter into any new Contract that, if entered into prior to the Execution Date, would be required to be listed on Schedule 7.13(a) (excluding, for the avoidance of doubt, entry into customary joint operating agreements in the ordinary course of business) or terminate (unless such Contract terminates pursuant to its stated terms), or materially amend or extend the terms of any contract that is required to be listed on Schedule 7.13(a);

(xii) enter into any compromise or settlement of any Proceeding pertaining to the Oil & Gas Assets or the Company, or waive or release any material right of the Company, in excess of $1,000,000, other than any settlement or compromise that involves only a payment from Seller to a Third Party and does not otherwise pertain to the Company;

(xiii) cancel (unless replaced with a comparable insurance policy) or materially modify (including coverage and types of insurance provided therein) or reduce the amount of any insurance policies in effect as of the Execution Date as set forth on Schedule 7.17;

(xiv) voluntarily relinquish or abandon any of the Oil & Gas Interests, except (A) as required by Law, Permit or any applicable Contract, or (B) for the expiration of any Lease in accordance with its terms;

(xv) declare, set aside or pay any non-cash distributions in respect of any of the Securities of the Company;

(xvi) incur, assume or guarantee, endorse or otherwise become liable for any Indebtedness other than (A) Indebtedness associated with the Credit Documents, bonds, letters of credit, surety or similar obligations incurred in the ordinary course of business in connection with the operation of the Oil & Gas Assets in an amount not to exceed $250,000, (B) scheduled repayments of Indebtedness at stated maturity to the extent such Indebtedness and scheduled repayment amounts and payment dates are set forth on Schedule 9.1, (C) other Indebtedness in an amount incurred since the date of this Agreement not to exceed $250,000, (D) Indebtedness outstanding as of the date of this Agreement that will be repaid by Seller or its Affiliates at the Closing in accordance with this Agreement or for which the Company will otherwise not be directly or indirectly liable as of the Closing, or (E) Indebtedness incurred under credit facilities as in effect as of the date of this Agreement (including the Credit Documents); provided, however, that Seller shall not (and shall cause the Company to not) cause the principal amount of the Credit Document Indebtedness to exceed $220,000,000 without the prior written consent of Buyer (which consent may be withheld in Buyer’s sole discretion);

(xvii) make any loans, advances or capital contributions to, or investments in, any other Person, other than expense advances in the ordinary course of business and/or loans made under the Company’s 401(k) plan in accordance with the existing terms thereof or prepay any Material Contracts;

(xviii) voluntarily resign as the operator of any Oil & Gas Assets that are currently operated by the Company;

(xix) without prejudice to the Company’s rights under Section 3.1(e) to cure an alleged Title Defect, amend or renew any Lease or agree to maintenance or bonus payments in connection therewith (provided that the Company may enter into amendments to or renewals of Leases, or agree to maintenance or bonus payments, for the purposes of lease extensions that do not result in extension fees or other payments exceeding, in the aggregate, $250,000);

(xx) enter into or become a party to any Hedge Contract that will burden the Oil & Gas Assets or the Company from and after Closing; or

(xxi) agree, whether in writing or otherwise, to do any of the foregoing or enter into any agreement.

Without limitation of this Agreement, no provision of Section 9.1(a) or Section 9.1(b) shall prohibit Seller from performing any of its obligations under any provisions of this Agreement. Requests for approval of any action restricted by Section 9.1(a) and Section 9.1(b) shall be delivered to the following individual, who shall have full authority to grant or deny such requests for approval on behalf of Buyer:

Xxxxxx Petroleum Operating Company

2000 W. Xxx Houston Parkway S.

Suite 2000

Houston, Texas 77042

Attn: Xxxxx Xxxxx
Email: XXxxxx@xxxxxx.xxx

Buyer’s consent to any action restricted by Section 9.1(a) and Section 9.1(b) shall be considered granted within ten (10) Business Days (unless a shorter time is reasonably required by the circumstances and such reasonable shorter time is specified in Seller’s notice) of Seller’s written notice to Buyer requesting such consent unless Buyer notifies Seller to the contrary during that period. Any matter expressly approved (and not, for purposes of clarity, deemed granted due to the expiration of the ten (10) Business Day period) by Buyer pursuant to Section 9.1(a) and Section 9.1(b) that would otherwise constitute a breach of one or more of Seller’s or the Company’s representations and warranties in Article 6 or Article 7 shall be deemed to be an exclusion from such representations and warranties.

Notwithstanding anything in this Agreement to the contrary, nothing contained in this Agreement shall: (1) prohibit or restrict the Company’s ability to make withdrawals, borrow funds or make payments or pre-payments under any Contract related to Indebtedness (including the Credit Documents); (2) prohibit or restrict the Company from making cash distributions to Seller; or (3) prohibit or restrict the Company from entering into customary, industry-standard joint operating agreements in the ordinary course of business. In cases in which neither the Company nor its Affiliate is the operator of the affected Oil & Gas Assets, to the extent that the actions described in Section 9.1(a) may only be taken by (or are the primary responsibility of) the operator of such Oil & Gas Assets, the provisions of this Section 9.1(a) shall be construed to require that the Company and its Affiliates vote their interests in a manner that complies in all respects with the provisions of Section 9.1(a) or Section 9.1(b), and Xxxxx agrees that the acts or omissions of the other working interests owners (including the operators) who are not the Company or the Company’s Affiliate shall not constitute a breach of the provisions of Section 9.1(a) or Section 9.1(b). Notwithstanding the foregoing provisions of Section 9.1(a) or Section 9.1(b), in the event of an emergency, Seller may take (and may cause the Company to take) such actions as may be reasonably necessary to protect life, property, or the environment, and shall notify Buyer of such action promptly thereafter.

(c) Reasonable Best Efforts. Subject to Section 9.1(a) and Section 9.1(b), and except as otherwise expressly set forth in this Agreement, the Parties shall cooperate and use their respective reasonable best efforts to take, or cause to be taken, all appropriate action, and do, or cause to be done, and assist and cooperate with the other Parties in doing, all things necessary, proper or advisable (subject to applicable Laws) to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. In addition, no Party shall take any actions after the date of this Agreement to materially delay the obtaining of, or result in not obtaining, any consent from any Governmental Authority necessary to be obtained prior to Closing. Notwithstanding the foregoing, Buyer acknowledges and agrees that Seller and the Company and each of their respective Affiliates have no responsibility for any financing that Buyer may raise in connection with the transactions contemplated by this Agreement, and no responsibility for the content of any rating agency presentations, offering documents, private placement memoranda, bank information memoranda, prospectuses and similar documents prepared by or on behalf of Buyer or its Affiliates, or Buyer’s financing sources, in connection with Xxxxx’s financing activities in connection with the transactions contemplated by this Agreement.

(d) Access to Information. From the Execution Date until the earlier of (x) the date this Agreement is terminated pursuant to Section 13.1 and (y) the Closing Date, subject to the limitations in Section 9.1(e), Section 9.1(f), and Section 14.11, and subject to obtaining any required consents of Third Parties, including Third Party operators of the Oil & Gas Assets, Seller shall grant to Buyer and its authorized Representatives reasonable access, during normal business hours and upon reasonable advance notice, to senior management, the properties and the books and records of the Company to the extent (and only to the extent) relating to the transition of the Company’s business to Buyer. Notwithstanding the foregoing, such access: (i) shall not unreasonably interfere with the normal operations of the Company or of Seller; and (ii) shall occur in such a manner as Seller reasonably determines to be appropriate to protect the confidentiality of the transactions contemplated by this Agreement. All requests for access shall be directed to Xxxx Xxxxxxxx XXX (at xxxx@xxxxxxxxxxxxxxxxxxx.xxx) or such other Person as Seller may designate in writing from time to time (the “Company Contact”). Except to the extent set forth in Section 4.2, such access shall not entitle Buyer to conduct any environmental assessment, including any monitoring, testing or sampling or any Phase I Environmental Site Assessments. In addition, nothing in this Agreement shall require Seller or the Company to provide access to, or to disclose any information to, Buyer or any other Person if such access or disclosure (A) would breach any obligations to any Third Party or obligation of confidentiality binding on Seller, the Company or the Oil & Gas Assets, (B) would cause competitive harm to Seller or the Company if the transactions contemplated by this Agreement are not consummated or (C) would be in violation of applicable Laws or regulations of any Governmental Authority or the provisions of any Contract or policy to which the Company is a party. Pursuant to its right of access to the personnel, the properties and the books and records of the Company (including in connection with Xxxxx’s Independent Title Review and Xxxxx’s Independent Environmental Review), Buyer acknowledges that it will become privy to confidential and other information of Seller and the Company. Each Buyer Party agrees that all such confidential information shall be held confidential by such Buyer Party and its Representatives in accordance with the terms of the Confidentiality Agreement. If Closing should occur, the foregoing confidentiality restriction on the Buyer Parties, including the Confidentiality Agreement and the confidentiality restriction in Section 4.2, shall terminate (except as to information related to any assets other than the assets of the Company, including any assets of Seller or any of its Affiliates other than the Company). For the avoidance of doubt, neither the Company nor Seller makes any representation or warranty as to the accuracy of any information (if any) provided pursuant to this Section 9.1(d). Xxxxx also acknowledges and agrees that none of Xxxxx, nor any of its Affiliates or their respective direct or indirect equityholders or representatives, may rely on (and expressly disclaim reliance upon) the accuracy of any such information other than the express representations and warranties of Seller and the Company set forth in Article 6 and Article 7 of this Agreement, as qualified by the Schedules. The information provided pursuant to this Section 9.1(d) will be used solely for the purpose of effecting the transactions contemplated by this Agreement, and will be governed by all of the terms and conditions of the Confidentiality Agreement.

(e) Access Indemnity. Notwithstanding any other provision in this Agreement to the contrary, the Buyer Parties shall indemnify, defend, hold harmless and forever release the Seller Indemnified Parties from and against any Losses arising out of or in connection with any site visits, access to or inspections of Seller’s or the Company’s assets, records or properties or any other diligence activity by or on behalf of Buyer or its Affiliates or their respective officers, employees, agents and

representatives (including pursuant to Buyer’s Independent Title Review or Independent Environmental Review), EVEN IF SUCH LOSSES ARISE OUT OF OR RESULT FROM, SOLELY OR IN PART, THE SOLE, ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OR VIOLATION OF LAW OF OR BY ANY OF THE SELLER INDEMNIFIED PARTIES, EXCEPTING ONLY (A) LIABILITIES ACTUALLY RESULTING ON THE ACCOUNT OF THE BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY OF THE SELLER INDEMNIFIED PARTIES AND (B) LIABILITIES THAT WERE EXISTING PRIOR TO SUCH INSPECTIONS OR ARISING OUT OF OR RELATING TO NONCOMPLIANCE WITH ENVIRONMENTAL LAWS THAT ARE MERELY DISCOVERED BY BUYER OR ANY OF ITS REPRESENTATIVES DURING SUCH DUE DILIGENCE INVESTIGATION.

(f) Communications. Prior to the Closing, without the prior written consent of Seller (which consent may be given or withheld in Seller’s sole discretion), Buyer shall not (and shall not permit any of its Affiliates or its or their respective employees, counsel, accountants, consultants, financing sources or other representatives to) (i) intentionally contact any Person that, to Buyer’s Knowledge, is an officer, director, manager, employee, consultant, direct or indirect equityholder, distributor, supplier, customer, contractor, or joint venture partner of the Company or of Seller or any Third Party operator of the Oil & Gas Assets, or other material business relation of the Company (including University Lands) other than the Company Contact (collectively, the “Restricted Contacts”) in connection with the transactions contemplated by this Agreement or engage in any discussions with any Restricted Contact in respect of the transactions contemplated by this Agreement or (ii) make any announcement or communication to any Restricted Contact regarding this Agreement or any of the transactions contemplated by this Agreement.

(g) Consents. After the Execution Date and prior to the Closing, the Company shall use commercially reasonable efforts to obtain consent from any party to a Contract with a member of the Company to the extent that such consent is required to be obtained in connection with the execution, delivery and performance of this Agreement and the Related Agreement, and the transactions contemplated in this Agreement or any Related Agreement. For the avoidance of doubt, such Company reasonable efforts shall not include: (i) making any expenditures or payments; or (ii) granting any accommodation (financial or otherwise) to any Third Party, in each case, unless Xxxxx agrees in writing to make such expenditures or payments or grants such accommodations. The Buyer Parties also agree to provide such assurances as to financial capability, resources and creditworthiness as may be required by any Third Party whose consent is sought in connection with the transactions contemplated by this Agreement and the Related Agreements. Neither Seller nor the Company shall have any liability to Buyer or its Affiliates or any other Person arising out of or relating to the failure of Seller or the Company to obtain any consent prior to the Closing.

(h) Notwithstanding anything herein to the contrary, (i) Seller shall have the right (exercisable in its sole discretion), but not the obligation, to (A) remove the Specified Inventory from its current place of storage or (B) otherwise assign, sell, transfer or dispose of (or cause the Company to assign, sell, transfer or dispose of) the Specified Inventory (including any applicable purchase orders), in each case, at any time prior to the Closing Date and (ii) any proceeds or revenues received by Seller or the Company with respect to the Specified Inventory prior to, on or after the Closing Date shall be for the sole account of Seller and there shall be no adjustment to the Purchase Price or direct or indirect entitlement of Buyer with respect to any such proceeds or revenues.

(i) Prior to the Closing, Seller and its Affiliates shall assign to the Company, and the Company shall accept and assume, (i) the office lease referenced on Annex A-4 and (ii) all rights, obligations and liabilities associated with the Proceedings described on Schedule 7.8.

Section 9.2 Further Assurances.

(a) Upon the request of a Party, at any time on or after the Closing, the Party or Parties shall (and shall cause its Affiliates to) promptly execute and deliver such further instruments of assignment, transfer, conveyance, endorsement, direction, or authorization and other documents as the

requesting Party may reasonably request in order to effectuate the purposes of this Agreement or the Related Agreements.

(b) Following Closing, Seller agrees to, and to cause its Affiliates to, use commercially reasonable efforts to cooperate with Buyer and the Company in connection with Buyer’s and the Company’s defense and other actions relating to or arising out of (a) any Proceeding scheduled on Schedule 7.8 (including any insurance claims relating to any such Proceeding) and (b) any other Proceeding arising out of, or resulting from the commitments, contractual arrangements, business, operations, or activities of the Company (or ownership or operation of the Oil & Gas Assets) during the period of Seller’s ownership of the Target Interests. Following Closing, Xxxxxx agrees to make available Seller’s or its Affiliates’ employees engaged in (or previously engaged in), or having information about, the ownership and operation of the Oil & Gas Assets, for the purposes of providing testimony, depositions, information and other related activities relating to any such Proceeding. Buyer shall, within five (5) Business Days after receipt of demand in writing therefor, reimburse Seller for all documented expenses and costs of Seller with respect to this Section 9.2(b), including, but not limited to, the costs associated with (i) the use of Seller’s employees to perform the services requested hereunder and (ii) Seller retaining consultants to perform the tasks identified in this Section 9.2(b) in the event that Seller, in its reasonable discretion, believes that same is necessary in order to allow its staff to continue to perform their daily job functions for the business of Seller or if requested by Xxxxx.

Section 9.3 Publicity. In furtherance of the confidentiality restrictions set forth in Section 4.2 and Section 9.1(d), prior to the Closing and after any termination of this Agreement, as applicable, each Buyer Party shall hold, and shall cause their Affiliates and Representatives to hold, in confidence, all confidential documents and information concerning Seller and the Company furnished to either Buyer Party or its Representatives in connection with this Agreement and the transactions contemplated by this Agreement in the manner specified in the Confidentiality Agreement. Notwithstanding anything to the contrary in the Confidentiality Agreement, without the prior written consent of the other Parties, no Party shall issue any press release or make any public announcement pertaining to this Agreement or the transactions contemplated by this Agreement or otherwise disclose the existence of this Agreement and the transactions contemplated by this Agreement and the Confidentiality Agreement to any Third Party. Notwithstanding the foregoing, disclosure may be made: (a) as required by applicable Law or by obligations pursuant to any listing agreement with any national securities exchange; (b) in connection with the procurement of any necessary consents, approvals, payoff letters and similar documentation; (c) each Party may disclose the terms of this Agreement to their respective Affiliates, accountants, legal counsel and other Representatives as necessary in connection with the ordinary conduct of their respective businesses, or are otherwise subject to an obligations of confidentiality with respect to such information; and (d) Buyer may issue press releases, public announcements or other public disclosures announcing this Agreement and/or the transaction contemplated hereby. In the event of any press release, public announcement or disclosure made pursuant to clause (d) of the preceding sentence, Buyer shall provide Seller with an advance copy of such press release, public announcement or disclosure. Buyer shall evaluate, in good faith, any reasonable suggestions to a press release received from Seller. To the extent applicable, Seller, its direct and indirect equityholders (including Carnelian and the OIE Funds), and their and its respective Affiliates, and Buyer and its respective Affiliates, may also disclose to their current or prospective financing sources, including such Party’s Affiliates’ investors and limited partners, and to prospective investors, purchasers or other Persons as part of fundraising or marketing activities undertaken by Seller’s Affiliates, Carnelian or the OIE Funds and their respective Affiliates, or by Xxxxx’s Affiliates, provided such disclosures are made to Persons subject to an obligation of confidentiality with respect to such information.

Section 9.4 Fees and Expenses. Each Party shall be liable for and pay all of its own costs and expenses (including attorneys’, accountants’ and investment bankers’ fees and other out-of-pocket expenses) in connection with the negotiations and execution of this Agreement and the Related Agreements, the performance of such Party’s obligations under this Agreement and the Related Agreements and the consummation of the transactions contemplated by this Agreement and the Related Agreements, and, for the avoidance of doubt, Seller shall pay all Transaction Expenses, regardless of whether payable prior to or on the Closing Date. Notwithstanding the foregoing, Buyer shall pay and be fully responsible for: (a) all filing fees under any Laws applicable to Buyer, in addition to any reasonable legal fees and expenses incurred by Seller or the Company in connection with complying with any request

for additional information or documents from any Governmental Authority in connection with such filings; (b) all fees, costs and expenses (if any) incurred in respect of the financing by Buyer and its Affiliates of the transactions contemplated by this Agreement and the Related Agreements; (c) fifty percent (50%) of all fees, costs and expenses of the Tail Policy; (d) fifty percent (50%) of the fees and costs of the Escrow Account; (e) any obligations of Buyer pursuant to Section 9.1(g); and (f) all fees, costs and expenses contemplated by Section 9.9.

Section 9.5 Managers and Officers.

(a) Xxxxx acknowledges that each person that prior to the Closing served as a director, officer, manager, employee, agent, trustee, partnership representative or fiduciary of the Company or who, at the request of the Company, served as a director, officer, manager, member, employee, agent, trustee or fiduciary of another corporation, partnership, joint venture, trust, pension or other Employee Benefit Plan or enterprise (collectively, with such person’s heirs, executors or administrators, the “Target Indemnified Persons”) is entitled to indemnification, expense reimbursement and exculpation to the extent provided in the Governing Documents of the Company in effect as of the Execution Date (“D&O Provisions”). Xxxxx also acknowledges and agrees that: (i) such D&O Provisions are rights of contract; and (ii) no amendment or modification to any such D&O Provisions shall affect in any manner the Target Indemnified Persons’ rights, or the Company’s obligations, with respect to claims arising from facts or events that occurred on or before the Closing. From and after the Closing, Buyer shall not amend, repeal or otherwise modify the indemnification provisions of its Governing Documents as in effect at the Closing in any manner that would adversely affect the rights thereunder of any present or former directors, officers, employees, partners, members and agents of the Company.

(b) At or prior to the Closing Date, Seller shall cause the Company to purchase and maintain in effect for a period of six (6) years thereafter a tail policy to the current policy of directors’ and officers’ liability insurance maintained by the Company. Such tail policy shall be effective for a period from the Closing through and including the date six (6) years after the Closing Date with respect to claims arising from facts or events that occurred on or before the Closing, and shall contain substantially the same coverage and amounts as, and contain terms and conditions no less advantageous than, in the aggregate, the coverage currently provided by such current policy. Concurrent with its purchase of the tail policy, the Company shall procure “run-off” coverage as provided by the Company’s fiduciary and employee benefit policies, in each case, covering those Persons who are covered on the Execution Date by such policies. Such run-off coverage shall have terms, conditions, retentions and limits of liability that are no less advantageous than the coverage provided under the Company’s existing policies (collectively, with the tail policy, the “Tail Policy”). No claims made under or in respect of such Tail Policy shall be settled without the prior written consent of Seller, which shall not be unreasonably withheld, conditioned or delayed.

(c) Buyer hereby covenants, for itself and its Affiliates, successors and assigns, that it and they shall not institute any action, suit or proceeding in any court or before any administrative agency or before any other tribunal against any present or former directors, officers, employees, partners, members or agents of the Company, in their capacity as such, with respect to the execution of their duties up to the termination of their appointment, including in connection with, arising out of, resulting from or in any way related to the transactions contemplated hereby, with respect to any liabilities, actions or causes of action, judgments, claims, or demands of any nature or description (consequential, compensatory, punitive or otherwise), excluding however, in each case, instances of actual fraud.

(d) If Buyer or the Company or any of their respective successor or assigns (i) consolidates with or merges into another Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfer or conveys all or substantially all of its assets to any Person, then, and in each case, to the extent not assumed by operation of law, proper provision shall be made so that the successors and assigns of Buyer or the Company, as the case may be, shall assume the obligations set forth in this Section 9.5.

(e) The provisions of this Section 9.5 shall survive the Closing and each Target Indemnified Person is expressly intended as a third-party beneficiary of this Section 9.5.

Section 9.6 Post-Closing Access to Books and Records. From and after the Closing Date, Buyer shall, and shall cause the Company to, provide Seller and its advisors and representatives with reasonable access (for the purpose of examining and copying at Seller’s sole expense), at reasonable times and upon reasonable advance notice, to the books and records of the Company with respect to periods prior to the Closing Date; provided, however, nothing herein shall require Buyer or the Company to provide access to, or to disclose any information to, Seller or any other Person if such access or disclosure would (a) breach any obligations to any Third Party or obligation of confidentiality binding on Buyer, the Company or the Oil & Gas Assets (provided that Buyer and the Company shall use commercially reasonable efforts to obtain a waiver of the applicable restriction(s)); or (b) be in violation of applicable Laws or regulations of any Governmental Authority or the provisions of any Contract or policy to which the Company is a party. Such access shall be for the limited purpose of examining and copying the Company’s books and records and shall be at Seller’s sole expense. For a period of seven (7) years following the Closing Date, Buyer shall cause the Company to not destroy, alter or otherwise dispose of any documents of any kind, or books and records of the Company, or any portions of the books and records of the Company, relating to periods prior to the Closing Date without first giving reasonable prior written notice to Seller and offering to surrender to Seller such books and records or such portions of such books and records. Following notice of such destruction, alteration or disposition, if Seller so requests, Seller may take possession of such books and records. Xxxxx acknowledges and agrees that Seller and its Affiliates shall be entitled to retain a copy of the files and records set forth on Section 9.6 from and after the Closing and shall be entitled to rely on and use such files and records.

Section 9.7 Employee Matters.

(a) Schedule 9.7 sets forth a list of employees and contractors of Seller or its Affiliates who may be considered for employment or consultancy by Buyer (each individually an “Available Employee” and collectively, the “Available Employees”) and for each Available Employee Seller has, prior to the Execution Date, provided Buyer the following information: (i) the individual’s title or position, hire date, and compensation, including base cash compensation and any other compensation, (ii) any Contracts entered into between Seller or any of its Affiliates and such individual, and (iii) a description of the fringe benefits provided to each such individual. From and after the Execution Date, Buyer shall be permitted to meet with and interview each Available Employee in connection with prospective employment or consultancy with Buyer and, no later than ten (10) days prior to the Closing Date, may extend an offer of employment or consultancy to any such Available Employee that is conditioned on the occurrence of the Closing and whose employment or engagement with Buyer will become effective as of 12:00 a.m. the date of the Termination Date (as defined in the Transition Services Agreement) applicable to such Available Employee (which in the case of Available Employees not providing services under the Transition Services Agreement may be the Closing Date), on terms reasonably determined by Buyer and otherwise not inconsistent with the terms of this Section 9.7. Buyer is responsible for scheduling any meetings or interviews and Seller and its applicable Affiliates shall reasonably assist Buyer with respect to such scheduling. Any meeting or interviews between Buyer and Available Employees shall be scheduled during normal business hours and otherwise at times and places that are not unreasonably inconvenient or disruptive to Seller or its Affiliates and the applicable Available Employee(s), with reasonable advance notice being provided to Seller or its Affiliates. It is understood that Buyer shall have no obligation to make an offer of employment or consultancy to or employ or engage any Available Employee. Seller shall (or shall cause its applicable Affiliate to) terminate the employment of each Available Employee who accepts an offer of employment with Buyer made pursuant to this Section 9.7(a) effective as of the Termination Date (as defined in the Transition Services Agreement) applicable to such Available Employee (which in the case of Available Employees not providing services under the Transition Services Agreement may be the Closing Date), and from and after such time each such Available Employee shall be a “Continuing Employee” for purposes of this Agreement. No such offer of employment or consultancy shall be for employment or consultancy that begins prior to 12:00 am the date of the Termination Date (as defined in the Transition Services Agreement) applicable to such Available Employee (which in the case of Available Employees not providing services under the Transition Services Agreement may be the Closing Date). For purposes of this Section 9.7, with respect to an Available Employee for whom Xxxxx makes an offer of employment or consultancy, such employment or consultancy may be directly with Buyer or indirectly with Buyer or a related employer and relevant provisions of this Section 9.7 shall be construed accordingly.

(b) If Buyer offers vacation or paid time off to its employees based on tenure with Xxxxx, the Continuing Employee’s vacation or paid time off offered by Xxxxx shall give the Continuing Employee credit for tenure with Seller or its Affiliates, as applicable.

(c) For the avoidance of doubt, upon and following the Termination Date (as defined in the Transition Services Agreement) applicable to such Available Employee (which in the case of Available Employees not providing services under the Transition Services Agreement may be the Closing Date), Buyer shall have no liabilities or responsibilities with respect to any Employee Benefit Plan, including any Employee Benefit Plan in which such Continuing Employee participates, participated or under which any Available Employee was otherwise covered (including any such Employee Benefit Plans providing for severance, change of control, transaction bonus, notice or other termination-related rights or payments). Furthermore, Seller and its Affiliates shall remain liable to provide continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (within the meaning of Section 4980B of the Internal Revenue Code and Subtitle B of Title 1 of ERISA) to all “M&A qualified beneficiaries” (as defined in Treasury Reg. § 54.4980B-9, Q&A-4) and shall fully indemnify Buyer to the extent of any failure to do so.

(d) The provisions of this Section 9.7 are solely for the benefit of the respective Parties to this Agreement and their respective successors and assigns and nothing in this Section 9.7, express or implied, is intended to or shall confer upon any current or former service provider of Seller or any of its Affiliates (or any dependent or beneficiary thereof), any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement, including any right to continuance of employment or any other service relationship with Buyer, the Company, Seller or any of their respective Affiliates, or any right to compensation or benefits of any nature or kind whatsoever under this Agreement. For the avoidance of doubt, nothing in this Agreement will be construed as an amendment or modification to or termination of any employee benefit plan or any other compensation and benefit plans maintained for or provided to directors, officers or employees of Seller or its Affiliates prior to or following the Closing.

Section 9.8 Insurance. Buyer shall be solely responsible from and after Closing for providing insurance to the Company and its business for events or occurrences occurring after the Closing. Buyer acknowledges that all insurance arrangements maintained by Seller and its Affiliates (other than the Company) for the benefit of the Company and their Affiliates, if any, will be terminated as of the Closing and no further business interruption, property or Losses shall be covered under any such insurance arrangements. Promptly following the Closing, Buyer shall obtain, or cause to be obtained, in the name of Buyer, such insurance covering the Oil & Gas Assets as would be obtained by a reasonably prudent operator in a similar situation.

Section 9.9 Credit Support. The Parties agree and acknowledge that the Credit Support listed on Schedule 9.9 provided by Seller or any of its Affiliates in support of obligations of the Company shall be returned to Seller or its Affiliate, as applicable, and Seller or such Affiliate released of all obligations. On or before the Closing Date, with reasonable cooperation from Seller or its applicable Affiliate, Buyer shall obtain, and deliver to Seller evidence of, all necessary replacement Credit Support. Such replacement Credit Support shall provide for a full release of Seller or its applicable Affiliate of any continuing obligations for all Credit Support set forth on Schedule 9.9 that is provided to a Third Party under any existing Contract or agreement or Governmental Authority in support of the obligations of the Company. Such release and replacement shall be in the form and substance satisfactory to such Third Party or Governmental Authority and Seller or its applicable Affiliate. Buyer shall be responsible for payment of any and all fees, costs and expenses associated with the replacement Credit Support and full release of Seller or its applicable Affiliate of the Credit Support listed on Schedule 9.9. From and after Closing, to the extent Buyer has not obtained, or caused to be obtained, replacement Credit Support, Buyer shall Indemnify the Seller Indemnified Parties against all Losses incurred by the Seller Indemnified Parties under any such Credit Support until released and replaced pursuant to this Section 9.9.

Section 9.10 Affiliate Arrangements; Resignations.

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MEMBERSHIP INTEREST PURCHASE AGREEMENT by and among PERCUSSION PETROLEUM MANAGEMENT II, LLC as Seller, PERCUSSION PETROLEUM OPERATING II, LLC as the Company, and CALLON PETROLEUM OPERATING COMPANY as Buyer and CALLON PETROLEUM COMPANY as Parent Dated...