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Stock Purchase Agreement

This is an actual contract between Berry Petroleum and Exxon Mobil.

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Sectors: Energy, Utilities
Governing Law: Texas, View Texas State Laws
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This Stock Purchase Agreement ("Agreement") is between Exxon Corporation, a New Jersey Corporation with an address of P.O. Box 2180, Houston, Texas 77252-2180 ("Exxon"), as seller, and Berry Petroleum Company, a Delaware Corporation with an address of Post Office Bin X, Taft, California 93268 ("Buyer"), as Buyer, effective on the Effective Date.

Buyer desires to purchase all of the outstanding capital stock of the San Joaquin Production Company, a Louisiana Corporation, formerly known as the Exxon San Joaquin Production Company ("SJPC"), and Exxon desires to sell such stock to Buyer, subject to the terms and conditions of this Agreement. SJPC and Formax Oil Company, a California Corporation ("Formax") join in this Agreement for the purpose of agreeing to take all actions required by them under the terms herein. It is the parties' intent that Buyer have responsibility for all matters relating to SJPC and Formax (but not for the SJPC Property, as defined below), whether related to events occurring before or after closing this transaction, except to the limited extent provided in this Agreement.

In consideration of their mutual promises under this Agreement, the benefits to be derived by each party, and other good and valuable consideration, Buyer and Exxon agree as follows:


The following terms as used in this Agreement will have the following definitions:

1.01. Additional Instruments. The instruments, if any, executed by Buyer before Closing and delivered to Exxon in connection with this transaction, including Buyer's investigation of and bid for the SJPC stock.

1.02. Associated Parties. Successors, assigns, directors, officers, employees, agents, contractors, and affiliates. It is expressly understood and agreed, that, for Exxon, Associated Parties shall include SJPC and Formax, their successors, assigns, directors, officers, employees, agents, contractors, and affiliates, provided that, notwithstanding the foregoing, it is understood and agreed that, SJPC and Formax, their successors, assigns, directors, officers, employees, agents, contractors and affiliates, shall not be deemed affiliates of Exxon with regard to any matter or action arising after the Closing Date.

1.03. Base Purchase Price. The amount set forth in Section 3.01.

1.04. Business Day. Any day that the headquarters offices of Exxon Company, U.S.A., a division of Exxon Corporation, in Houston, Texas, are scheduled to be and are open for business.

1.05. Claim or Claims. Collectively, claims, demands, causes of action, and lawsuits asserted or filed by any person, including an artificial or natural person; a local, state, or federal governmental entity; an Associated Party of Buyer, Exxon, SJPC or Formax; or a third party.

1.06. Closing. The delivery of the stock certificates and executed stock powers and funds by the parties to close the purchase and sale of the SJPC stock.

1.07. Closing Date. The date on which Closing is scheduled to and does occur.

1.08. Code. The Internal Revenue Code of 1986, as amended.

1.09. Condition. Defined in Section 12.02.

1.10. Effective Date. The date on which the last of the parties executes this Agreement.

1.11. Effective Time. 7 a.m. local time where the Formax Property is located, on July 1, 1996.

1.12. Environmental Laws. Applicable federal, state, and local laws, including statutes, regulations, orders, ordinances, and common law, currently enacted or enacted in the future and relating to protection of public health, welfare, and the environment, including those laws relating to storage, handling, and use of chemicals and other hazardous materials; those relating to the generation, processing, treatment, storage, transport, disposal, cleanup, remediation, or other management of waste materials or hazardous substances of any kind; and those relating to the protection of environmentally sensitive or protected areas. "Environmental Laws" includes, but is not limited to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Resource Conservation and Recovery Act of 1976, the Clean Water Act, the Safe Drinking Water Act, the Hazardous Materials Transportation Act, the Toxic Substance Control Act, and the Clean Air Act, as each is amended from time to time.

1.13. Formax Property. That real and personal property described on Exhibit A hereto.

1.14. SJPC Property. Any and all property owned by SJPC other than the stock of Formax.

1.15. Liability or Liabilities. Collectively, all damages (including consequential and punitive damages), including those for personal injury, death, or damage to personal or real property (both surface and subsurface) and costs for remediation, restoration, or clean up of contamination, whether the injury, death, or damage occurred or occurs on or off the Formax Property by migration, disposal, or otherwise, losses, fines, penalties, expenses, costs to remove

or modify facilities on or under the Formax Property, plugging liabilities for all Wells, attorneys' fees, court and other legal costs incurred in defending any Claim, liens, and judgments, whether these damages and other costs are known or unknown, foreseeable or unforeseeable.

1.16. NORM. Naturally occurring radioactive material.

1.17. Oil. Crude oil, distillate, drip gasoline, condensate, and liquid hydrocarbons.

1.18. Occurrence. Defined in Section 12.03.

1.19. Operator. The person designated as operator of an oil and gas property by the applicable regulatory agency.

1.20. Strict liability. Includes strict statutory liability and strict products liability.

1.21. Well or Wells. Oil and gas wells, both abandoned and unabandoned.

1.22. Net Working Capital. The amount equal to the difference between: (a) the sum of the combined net balances (after giving effect to applicable allowances or reserves) of the cash accounts, accounts receivable, current prepaid accounts, and all other current period asset accounts of Formax and SJPC, with the exception of the product inventory accounts; and (b) the sum of the combined net balances of the accounts payable, and all other current liability accounts of Formax and SJPC, but excluding all income, ad valorem and severance taxes under the taxes payable account, all determined in accordance with GAAP and consistent with past reporting practices.

1.23. Governmental Authority. Means any federal, state, local, or other governmental or administrative authority, agency, court, tribunal, commission, board or bureau.

1.24. Income Tax. Means any tax based solely on or measured solely by taxable or net income (including the California franchise tax), including any interest, penalty, or addition to tax, imposed by any Governmental Authority and excluding, without limitation, any ad valorem tax, excise tax, sales tax, use tax, real or personal property tax, transfer tax, gross receipts tax, or other tax, assessment, duty, fee, levy or other Governmental charge, together with and including without limitation, any and all interest, fines, penalties, assessments and additions to tax resulting from, relating to, or incurred in connection with any such tax or any contest or dispute thereof.

1.25. Income Tax Return. Means any report, statement, form, return or other document or information required to be supplied to a Taxing Authority in connection with Income Taxes.

1.26. Proceeding. Means any action, suit or other judicial or administrative proceeding, at law or in equity, before any Governmental Authority.

1.27. Return. Means any and all returns, declarations of estimated tax, reports, statements and other documents relating to or required to be filed in respect of Taxes, including information returns or reports with respect to backup withholding and other payments to third parties.

1.28. Taxing Authority. Means any Governmental Authority having jurisdiction over the assessment, determination, collection, or other imposition of Tax.

1.29. Tax. Means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

1.30. Estimated Depletable Tax Basis. The estimated total depletable tax basis in the Formax Property as of the Effective Time, determined by Formax prior to Closing.

1.31. Assumed Depletable Tax Basis. A total depletable tax basis of $45 million.

1.32 Estimated Depreciable Tax Basis. The estimated total depreciable tax basis in the Formax Property as of the Effective Time, determined by Formax prior to Closing.

1.33 Assumed Depreciable Tax Basis. A total depreciable tax basis of $6 million.


2.01. Agreement to Sell. Pursuant to Buyer's offer, Exxon agrees to sell all the outstanding capital stock of SJPC to Buyer, and Buyer agrees to buy all such stock from Exxon, for the consideration recited in and subject to the terms of this Agreement.

2.02. Assets to be Sold and Retained.

(a) It is understood that, as of the Effective Time,
Formax's sole material asset is the Formax Property.

(b) It is expressly agreed that, prior to Closing:

(i) Effective one minute prior to the Effective Time SJPC
shall have conveyed all of its interest in the SJPC
Property, to Exxon, or an entity designated by Exxon, on
that form attached hereto as Exhibit B-1, it being expressly
understood and agreed that: 1) neither this Agreement, nor
any instrument executed in relation hereto, is intended to
grant or convey to Buyer any interest in, or obligations
pertaining to, the SJPC Property, and

2) the provisions hereof concerning inspections, indemnities,
and matters related thereto shall not be applicable to the SJPC
Property, it being understood and agreed that, for the purposes
of the application of this Agreement, the parties shall treat
the SJPC Property as though it had been conveyed, pursuant to
this provision, prior to the Effective Time; and

(ii) Effective as of two minutes prior to the Effective Time, Formax
shall have conveyed to SJPC, on the form attached hereto as
Exhibit B-2, an Overriding Royalty upon the terms and conditions
more specifically set out in said Exhibit B-2. Effective as
of one minute prior to the Effective Time, SJPC shall have
conveyed said Overriding Royalty to Exxon on the form attached
hereto as Exhibit B-3.

(c) If either party determines, either before or after the Closing Date,
that the description of any interest contained in the instruments
described in (b) (i) and (ii), above, is in error, then Exxon and
Buyers will meet and use their best efforts to resolve the error. If
necessary after Closing, the parties will execute and record
appropriate correction and other instruments to correct the error.


3.01. Base Purchase Price. The Base Purchase Price is U.S. Fifty One Million, Five Hundred Thousand Dollars ($51,500,000) subject to adjustment as provided herein.

3.02. Performance Deposit and Payment. As evidence of good faith, Buyer has deposited with Exxon a performance deposit of U.S. Five Million Dollars ($5,000,000). The performance deposit will be credited to the Base Purchase Price at Closing, will not bear interest, and is not refundable except as provided in this Agreement. The performance deposit is not an earnest money deposit or liquidated damages, and forfeiture of the performance deposit as provided in this Agreement will be in addition to, and not in lieu of, the rights and remedies Exxon may have under law or in equity for Buyer's failure to perform as provided in this Agreement.


4.01 Tax Matters. SJPC and Formax have filed or will have filed by the Closing Date all Tax Returns required to be filed, and have paid all Taxes shown thereon as owing, except where the failure to file Tax Returns or to pay Taxes would not have an adverse effect on the financial condition of Buyer. The income of SJPC and Formax will be apportioned to the period up to and including the Closing Date and the period after the Closing Date by closing the books of SJPC and Formax as of the end of the Closing Date. Buyer, SJPC, and Formax, in accordance with the past custom and practice of SJPC and Formax, will furnish Tax information to Exxon for inclusion in Exxon's Returns for the period which includes the Closing Date. Subject to allocation as provided in Article 10, Exxon and its Associated Parties will be responsible for all Taxes resulting from operations of SJPC and Formax on or prior to

the Closing Date. Exxon and its Associated Parties will remain liable, and shall indemnify Buyer against and hold it harmless from, any Claims for such Taxes, penalties, interest, or assessments which relate to any Tax filing or Return which has been, will, or should be filed, and the Tax paid, by Exxon.

4.02 Income Tax Sharing Agreements. Any Income Tax sharing agreement between or among Exxon, SJPC, and Formax is terminated as of the Closing Date.

4.03 Taxes. Buyer, SJPC, and Formax will be responsible for all Taxes with respect to SJPC and Formax, resulting from operations subsequent to the Closing Date and will file the appropriate Returns relating to such Taxes. Buyer, SJPC, and Formax shall indemnify Exxon against and hold it harmless from any Claims for Taxes, penalties, interest, or assessments which relate to any such required Tax filing or Return which will or should be filed and the Tax paid by Buyer, SJPC, or Formax subsequent to the Closing Date. Up until five years after the Closing Date Exxon will furnish to Buyer Tax information relating to Formax, as reasonably requested, for inclusion in Buyer's, SJPC's or Formax's Income Tax Returns.

4.04 Post-Closing Elections. At Exxon's request, Buyer will cause SJPC and Formax to make or join with Exxon in making any other election for any post acquisition period, if the making of such election does not have a material adverse impact on Buyer or limit Buyer's utilization of its or SJPC's investment in the Formax stock.

4.05 Claims and Suits for Refund. With respect to any pending or subsequently filed Claim for refund of any Tax for or in respect to periods ending on or prior to the Closing Date, Buyer agrees to notify Exxon within ten (10) days of such Claim. Exxon will retain complete discretion to prosecute, settle or abandon on behalf of SJPC or Formax each of such Claims.

Buyer will provide Exxon with all reasonable cooperation in obtaining such refunds (including the execution of appropriate powers of attorney) and will make the records and personnel of SJPC and Formax available to assist Exxon or any counsel designated by Exxon to prosecute any such Claim.

In the event that any refund of any such Taxes is received by Buyer, SJPC, or Formax with respect to periods ending on or prior to the Closing Date, Buyer will pay to Exxon within fifteen (15) days an amount equal to such refund plus any interest received on such refund.

4.06 Assistance and Records (Exxon). Buyer, SJPC, and Formax shall provide Exxon with such assistance as Exxon may reasonably request in connection with the preparation of Income Tax Returns or Returns relating to any other Taxes required to be filed by Exxon or its Associated Parties, any audit or other examination by any Taxing Authority, any Proceedings relating to liability for Income Taxes or other Taxes, or any Claim for refund with respect to such Taxes relating to the business or operations of SJPC, Formax, or the Formax Property prior to the Closing Date. Such assistance shall include making employees

available to Exxon and its counsel, providing additional information and explanation of any material to be provided, furnishing to or permitting the copying by Exxon or its counsel, of any records, Returns, schedules, documents, work papers or other relevant materials which might reasonably be expected to be used in connection with such Return, audit, examination, Proceeding or Claim.

(a) Exxon will retain complete discretion in conducting and resolving
any audit, administrative or judicial Proceeding relating to any
such Tax with respect to periods ending on or before the Closing
Date. Buyer will notify Exxon within five (5) days of any such
audit, proposed adjustment or related matter that could affect
Exxon's Income Tax or other Tax liability.

(b) Exxon will identify and retain either originals or copies of any
records or information which, in Exxon's sole discretion, may be
relevant to such Return, audit, examination Proceeding, or Claim.
Buyer will otherwise retain and, upon the request of Exxon, provide
any records or information which may be relevant to such Return,
audit, examination, Proceeding, or Claim.

4.07 Assistance and Records (Buyer). Exxon shall provide Buyer, SJPC, and Formax with reasonable assistance relating to the Taxes, including ad valorem and severance taxes, concerning SJPC and any of its assets as of Closing as Buyer, SJPC and Formax may reasonably request within 5 years after the Closing Date in connection with the preparation of Income Tax Returns or Returns relating to any other Taxes required to be filed by Buyer, SJPC or Formax, any audit or other examination by any Taxing Authority, any Proceedings relating to liability for Income Taxes or other Taxes, or any Claim for refund with respect to such Taxes relating only to the operations of the Formax Property. It is expressly agreed that, in the event that Buyer shall request any type of audited financial records, Buyer shall enter into an agreement for the provision of such records with an accounting firm approved by Exxon, and Buyer shall be solely responsible for the cost of obtaining such financial records.


5.01. Buyer's Review before Signing this Agreement. Exxon gathered data relating to SJPC, Formax and the Formax Property for the Buyer to review before submitting a bid and signing this Agreement. The data included files in the possession of Exxon, SJPC, and Formax, concerning the Formax Property (for example, geological, geophysical, production, engineering, and other technical data and records; contract, land, lease, and permit records; and files concerning petroleum, produced water, wastes and other materials that may have leaked, spilled, or been disposed of on-site, with locations, pits and pit closures, burial, landfarming, landspreading, underground injection, and solid waste disposal sites).

Buyer must notify Exxon in writing if it wishes to review any additional files or data, but Exxon's obligation to provide additional data is limited to data that are reasonably available to it. Exxon and its Associated Parties have no obligation to provide access to, and Buyer waives any claims to inspect, Exxon's or its Associated Parties' interpretive, predictive, confidential,

private, proprietary, or privileged information (including personnel records), or information whose dissemination is restricted by agreements between Exxon or its Associated Parties and third parties. Exxon and its Associated Parties have no obligation to provide any information to Buyer that is available to the general public, whether in the public records or from a governmental entity or agency on request.

Buyer represents by entering into this Agreement that it has reviewed the records related to SJPC, Formax, and the Formax Property, and all other relevant records to its satisfaction to enable it to make its bid and execute this Agreement. Buyer may request adjustments to the Base Purchase Price after the Effective Date only for Title Defects, Conditions, and Material Differences, as provided below. Buyer has undertaken all appropriate inquiry, to its satisfaction, and has made an informed decision to acquire all of the outstanding capital stock of SJPC on the basis of its own investigations and without reliance on statements or investigations by any other person, including Exxon and its Associated Parties.

5.02. Access to Formax Property. Buyer had the opportunity to inspect and inventory the Formax Property before signing this Agreement. On Buyer's request, Exxon will provide additional access to the Formax Property at any reasonable time before Closing. Buyer may inspect the premises and conduct an environmental assessment of the Formax Property, including investigations to identify wetlands and sensitive and protected habitats. If this Agreement is terminated, Buyer must restore the premises of the Formax Property to their pre-entry condition.

Buyer's visits to the Formax Property will be scheduled by mutual consent of the parties, subject to Buyer's providing Exxon at least five days written notice of the locations that it wishes to visit and the proposed times. Exxon may accompany Buyer during its site visits. Entry onto the Formax Property will be subject to third-party restrictions, if any, and to Exxon's safety, industrial hygiene, drug and alcohol and firearm requirements, and will be at Buyer's sole risk and expense.

If Buyer undertakes an environmental assessment, both the consultant (if consultants are employed) and the scope of the proposed assessment, including testing protocols, must be reasonably acceptable to Exxon before the work may begin. If Buyer and Exxon cannot agree on Buyer's proposed environmental assessment plan, then Exxon may, at its sole option, terminate this Agreement and Exxon will refund the performance deposit to Buyer.

If Buyer takes samples from the Property, Exxon may require splitting of each sample. Buyer will deliver, at Buyer's cost, copies of all draft and final reports, results, data, and analyses of the site visits, inspections, and assessments to Exxon within five days of Buyer's receipt of them, at Buyer's cost. Exxon and its Associated Parties will have no confidentiality obligation with regard to this information and may disclose it to third parties and use it for any purpose.

5.03. Materials and Equipment. Facilities and major items of material and equipment included in the Formax Property have been described to Buyer. By signing this Agreement, Buyer acknowledges that it has had the opportunity to inspect and inventory the facilities, material and equipment and is satisfied with them, including their condition. There will be no

adjustment to the Base Purchase Price on the basis of facilities, material and equipment. Facilities, material and equipment observed during Buyer's inspection are subject to replacement or depletion before Closing as a result of normal and customary operations.

5.04. No Warranty of Accuracy; Disclaimer. Exxon and its Associated Parties make no warranty, and expressly disclaim all warranties, as to the accuracy or completeness of the files and other information that they may provide to Buyer. If Buyer determines during its review that any files or data may be incomplete or inaccurate, it will either notify Exxon of its conclusions in writing not later than ten days before the Closing Date or be deemed to have waived complaints as to the incompleteness or inaccuracy of the files or data.

5.05. Buyer's Confidentiality Obligations. Buyer will keep confidential all information provided pursuant to the terms hereof, except to the extent that information (a) was public knowledge when Buyer received the information; (b) becomes public knowledge without breach of this Agreement by Buyer; or (c) was known to Buyer before receipt or discovery of the information in connection with its review of SJPC, Formax, and the Formax Property. Buyer may not use the information for any purpose other than evaluation of SJPC and may not divulge the information to any person except those who need to know it in order to evaluate SJPC for Buyer under this Agreement. Buyer will enforce this confidentiality obligation as to all persons with whom it shares the information and is liable to Exxon for a breach of this obligation by any person to whom Buyer has disclosed the information. If this transaction does not close, Buyer will return to Exxon all information that it obtained from Exxon or its Associated Parties, destroy all of its work papers and analysis that incorporate the information, and be subject to these confidentiality obligations for five years after the Effective Date. Buyer's confidentiality obligation will not, however, survive Closing.


6.01. Title Defect. "Title Defect" means any one of the following:

(a) Formax's title at the Effective Time as to all or any part of
the Formax Property is subject to an outstanding mortgage, deed
of trust, lien or other monetary encumbrance or adverse claim not
listed or referenced on Exhibit A that would induce a purchaser
to suspend payment of proceeds for the Formax Property or require
the furnishing of security or indemnity. Evidence that Formax is
currently receiving its full share of proceeds from a purchaser or
third-party Operator (not under a 100% or other division order
requiring Formax to further distribute proceeds to third parties)
for the Formax Property creates a presumption that no Title Defect
exists with respect to the Formax Property.

(b) Formax's net revenue interest or working interest in the Formax
Property at the Effective Time is less than that shown on
Exhibit A, provided that, for the purposes hereof, Formax's net
revenue interest in the Formax Property shall not be deemed to be
reduced as a result of the existence of any of those interests
described on Exhibit A, including, but not limited to a back-in
to a working interest

or an increase in an overriding royalty, which occurs under the
terms of said interests.

(c) Formax's interest would be reduced if a third party were to
exercise a reversionary, back-in, or other similar right
not listed or referenced on Exhibit A.
(d) Formax is in material default under some material provision of
a lease, farmout agreement, or other agreement resulting in
loss of all or any part of the Formax Property.

(e) The title of Exxon to all of SJPC stock or the title of SJPC
to all of Formax stock is subject to an outstanding mortgage,
deed of trust, lien or other monetary encumbrance or claim.

(f) Exxon has not complied with the
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