PURCHASE AGREEMENT BY AND AMONG BAYTEX ENERGY USA LLC AS SELLER AND SM ENERGY COMPANY AS BUYER DATED AS OF JULY 29, 2014

THIS PURCHASE AGREEMENT (this "Agreement"), dated July 29, 2014 (the "Execution Date"), is by and among

BAYTEX ENERGY USA LLC, a Colorado limited liability company ("Seller"), and

SM ENERGY COMPANY, a Delaware corporation ("Buyer").

Seller and Buyer are hereinafter referred to individually as a "Party" and collectively as the "Parties."

WHEREAS, Baytex Energy USA Ltd. was the owner of certain assets, contracts, benefits and obligations associated with certain oil and gas operations in North Dakota and described herein, and on July 14, 2014, Baytex Energy USA Ltd. merged with and into Seller; as used in this Agreement, all references to "Seller" include Baytex Energy USA Ltd.;

WHEREAS, immediately prior to the Closing, the Seller will create a new Delaware limited liability company (the "Company") and will contribute the Subject Assets to the Company and cause the Company to assume the Assumed Liabilities; and

WHEREAS, following the transfer of the Subject Assets to the Company and the assumption by the Company of the Assumed Liabilities, Seller desires to sell and transfer to Buyer, and Buyer desires to purchase from Seller, all of the Membership Interests upon the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the Parties agree as follows:

Unless the context otherwise requires, the respective terms defined in Appendix A attached hereto shall, when used herein, have the respective meanings therein specified, with each such definition to be equally applicable both to the singular and the plural forms of the term so defined.

All references in this Agreement to an "Article," "Section," or "subsection" shall be to an Article, Section, or subsection of this Agreement, unless the context requires otherwise. Unless the context requires otherwise, the words "this Agreement," "hereof," "hereunder," "herein," "hereby," or words of similar import shall refer to this Agreement as a whole and not to a particular Article, Section, subsection, clause or other subdivision hereof. Whenever the context requires, the words used herein shall include the masculine, feminine and neuter gender, and the singular and the plural.

Upon and subject to the terms and conditions set forth in this Agreement, at the Closing, Seller shall sell, transfer and deliver to Buyer, free and clear of all Liens (other than restrictions on the transfer of securities arising under applicable federal and state securities Laws), and Buyer shall purchase from Seller, all right, title and interest in and to the Membership Interests.

The consideration (the "Purchase Price") for the sale of the Membership Interests to Buyer shall be Three Hundred Thirty Million, Four Hundred Eighty Thousand Dollars and No/100 ($330,480,000.00). The "Adjusted Purchase Price" shall be the Purchase Price as adjusted under Section 2.5.

Contemporaneously with the execution of this Agreement, (a) Buyer, Seller and Wells Fargo Bank, National Association (the "Escrow Agent") entered into the Deposit Escrow Agreement in the form attached hereto as Exhibit B (the "Deposit Escrow Agreement"), and (b) Buyer deposited an amount equal to seven and one-half percent (7.5%) of the Purchase Price with the Escrow Agent into an account (the "Escrow Account") as a deposit hereunder (such amount, together with all interest earned thereon, the "Cash Deposit"). The Cash Deposit shall be held and distributed by the Escrow Agent in accordance with the terms of this Agreement and the Deposit Escrow Agreement.

At the Closing, (a) Buyer shall wire transfer the Adjusted Purchase Price minus the Cash Deposit and any amounts to be deposited with the Escrow Agent pursuant to Section 5.5(a) and Section 6.8(a) (such amount, the "Closing Amount") in immediately available funds to one or more accounts specified by Seller, and (b) Buyer and Seller shall provide written instructions to the Escrow Agent directing the Escrow Agent to disburse the Cash Deposit and any interest earned thereon pursuant to the Deposit Escrow Agreement to Seller.

Settlement Statement prior to Closing, the Preliminary Settlement Statement delivered by Seller shall be used for purposes of calculating the Closing Amount.

After the Closing, Seller shall review the Preliminary Settlement Statement and determine the actual Adjusted Purchase Price pursuant to Section 2.5. On or prior to the ninetieth (90^th) day after the Closing Date, Seller shall present Buyer with a statement of the actual Purchase Price adjustments and such supporting documentation as is reasonably necessary to support the Adjusted Purchase Price shown therein (the "Final Settlement Statement"). Buyer will give representatives of Seller or its Affiliates reasonable access to its premises and to the books and records of Buyer and the Company for purposes of preparing the Final Settlement Statement and will cause appropriate personnel of Buyer and, if applicable, the Company to assist Seller, its Affiliates, and its and their representatives, at no cost to Seller, in the preparation of the Final Settlement Statement. Seller will, and will cause its Affiliates to, give representatives of Buyer and, if applicable, the Company, reasonable access to its and their premises and to its and their books and records for purposes of reviewing the calculation of the Adjusted Purchase Price set forth in the Final Settlement Statement and will cause appropriate personnel of Seller and its Affiliates to assist Buyer and its representatives, at no cost to Buyer or the Company, in verification of such calculation. The Final Settlement Statement shall become final and binding on Seller and Buyer sixty (60) days following the date the Final Settlement Statement is received by Buyer, except to the extent that prior to the expiration of such sixty (60) day period, Buyer shall deliver to Seller notice, as hereinafter required, of its disagreement with the contents of the Final Settlement Statement. Such notice shall be in writing and set forth all of Buyer's disagreements with respect to any portion of the Final Settlement Statement, together with Buyer's proposed changes thereto, and shall include an explanation in reasonable detail of, and such supporting documentation as is reasonably necessary to support, such changes. If Buyer has timely delivered such a notice of disagreement to Seller, then, upon written agreement between Buyer and Seller resolving all disagreements of Buyer set forth in such notice, the Final Settlement Statement will become final and binding upon Buyer and Seller. If the Final Settlement Statement has not become final and binding by the ninetieth (90th) day following its receipt by Buyer, then Buyer or Seller may submit any unresolved disagreements of Buyer set forth in such notice to the Houston, Texas office of KPMG LLP (the "Independent Accounting Firm") who shall be designated to act as an arbitrator and to decide all points of disagreement with respect to the Final Settlement Statement, such decision to be binding upon Buyer and Seller. Buyer and Seller shall use commercially reasonable efforts to cause such arbitrator to render its decision within fifteen (15) Business Days after such points of disagreement are submitted to such arbitrator. The costs and expenses of such arbitrator shall be borne equally by Seller and Buyer. Upon resolution of such unresolved disagreements, the Final Settlement Statement shall be final and binding upon the Parties. The date upon which such agreement is reached or upon which the final Adjusted Purchase Price is established shall be herein called the "Final Settlement Date." If the Adjusted Purchase Price shown in the Final Settlement Statement is more than the Adjusted Purchase Price shown in the Preliminary Settlement Statement, Buyer shall pay to Seller the amount of such difference by wire transfer in immediately available funds no later than five (5) Business Days after the Final Settlement Date. If the Adjusted Purchase Price shown in the Final Settlement Statement is less than the Adjusted Purchase Price shown in the Preliminary Settlement Statement, Seller shall pay the amount of such difference, to Buyer by wire transfer in immediately available funds no later than five (5) Business Days after the Final Settlement Date.

Seller represents and warrants to Buyer as follows:

copies of all federal income Tax Returns, examination reports and statements of deficiencies assessed against or agreed to by the Company or the Seller with respect to the Company or the Subject Assets filed or received since December 31, 2011.

Notwithstanding anything to the contrary set forth in this Agreement, this Section 3.1(i) contains the sole and exclusive representations and warranties of Seller relating to Taxes.

or any of its Affiliates or any other Subject Assets comprising the Business (including, in each case, any Release or threatened Release at any offsite location where the Seller or its Affiliates transported or disposed, or arranged for the transport or disposal, of Hazardous Materials) that is reasonably likely to give rise to a material liability to the Company or the Seller or its Affiliates; and

The representations and warranties made in this Section 3.1(l) are the only representations and warranties of Seller with respect to Environmental Laws, Hazardous Materials, Remediation and other environmental matters.

Affiliates is currently, or at any time during the two years prior to the date hereof has been, designated as the named “operator” such that there exists cause for removal of Seller or any of its Affiliates as the operator.

as provided in Section 3.1(r), Seller makes no representations or warranties to Buyer as to the continued operatorship after the date of the Asset and Liability Transfer of the Subject Assets which Seller or its Affiliates currently operate.

Seller represents and warrants to Buyer as follows:

Buyer represents and warrants to Seller as follows:

Promptly following the execution of this Agreement and until the Defect Notice Date (or earlier termination of this Agreement), Seller (a) shall permit Buyer and its representatives at reasonable times to examine, in Seller's offices, all Records including abstracts of title, title opinions, title files, ownership maps, lease files, assignments, division orders, and similar documents relating to the Subject Assets insofar as the same are in the possession or control of Seller or any Affiliate of Seller and insofar as Seller or any Affiliate of Seller may do so without (i) violating any legal constraint or confidentiality obligation to a third Person (provided that Seller shall use all commercially reasonable efforts to obtain any necessary waivers of such obligations to allow disclosure of any Records) or (ii) waiving any attorney/client privilege and (b) subject to any required consent of any third Person (provided that Seller shall use all commercially reasonable efforts to obtain any such consents), shall permit Buyer and its representatives at reasonable times and at Buyer's sole risk, cost and expense, to conduct, in the presence of Seller's representatives, reasonable inspections of the Subject Assets; provided that Buyer shall not conduct any Phase II environmental testing or other invasive surface or subsurface testing without Seller’s prior written consent, which may not be unreasonably withheld, conditioned or delayed; provided, further, Buyer does hereby indemnify and hold harmless the Seller Indemnified Parties from and against any and all Covered Liabilities caused by Buyer's inspection of the Subject Assets, REGARDLESS OF ANY CONCURRENT NEGLIGENCE OR STRICT LIABILITY ON THE PART OF ANY SELLER INDEMNIFIED PARTY AND REGARDLESS OF THE FORM OF CLAIM WHETHER AT COMMON LAW, STRICT LIABILITY, NEGLIGENCE OR UNDER ANY STATUTE OR REGULATION, EXCLUDING, HOWEVER, COVERED LIABILITIES RESULTING FROM AND TO THE EXTENT CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY SELLER INDEMNIFIED PARTY. Unless caused by Buyer’s inspection of the Subject Assets, prior to the Closing, Buyer shall not be required to defend, indemnify and hold harmless the Seller Indemnified Parties pursuant to this Section 4.1 from and against any Covered Liabilities arising out of, resulting from or relating to any pre-existing Environmental Defect identified by or on behalf of Buyer as a result of any physical inspection, due diligence activities or access granted to Buyer and Buyer’s representatives pursuant hereto; provided that if Closing occurs, this Section 4.1 shall not limit Buyer’s assumption of the Assumed Liabilities and Seller’s right to indemnification pursuant to Article 12.

regarding confidentiality in the Confidentiality Agreement; provided, however, that the Parties hereby acknowledge and agree that nothing in this Section 4.2(a) shall affect or limit any of the (i) other provisions set forth in the Confidentiality Agreement (including all provisions regarding non-solicitation and standstill) or (ii) generally applicable provisions set forth in the Confidentiality Agreement to the extent such provisions relate to such other provisions.

Without limiting Buyer's right to receive an adjustment to the Purchase Price by operation of Section 5.2, and except for the special warranty of Defensible Title contained in Section 3.1(m), Seller makes no warranty or representation, express, implied, statutory or otherwise, with respect to Seller’s or the Company's title to any of the Subject Assets and Buyer hereby acknowledges and agrees that, except as provided above, Buyer's sole remedy for any defect of title, including any Title Defect, with respect to any of the Subject Assets shall be pursuant to the procedures set forth in this ARTICLE 5.

(vii) supporting documents reasonably necessary for Seller (as well as any title attorney or examiner hired by Seller) to verify the existence of such asserted Title Defect; provided, however, that to the extent that Seller and Buyer are in disagreement as to whether or not Buyer's written notice of Title Defect is effective as provided above, Seller and Buyer shall resolve such dispute pursuant to Section 5.5 of this Agreement. To give Seller an opportunity to commence reviewing and curing Title Defects, on a weekly basis, Buyer shall give Seller written notice of any Title Defect that Buyer determines exists, which notice may be preliminary in nature and supplemented prior to 5:00 P.M., Mountain Time, on the Defect Notice Date; provided, however, any failure of Buyer to deliver such notice shall not constitute a breach of this Agreement.

A portion of a Property Subdivision shall be deemed to have a "Title Defect" if the Seller fails to have Defensible Title thereto as of the Defect Notice Date. Notwithstanding any other provision in this Agreement to the contrary, the following matters shall not be asserted as, and shall not constitute Title Defects: (a) defects in the early chain of title consisting of the mere failure to recite marital status in a document or omissions of successions of heirship proceedings, unless Buyer provides affirmative evidence that such failure or omission results in another Person's superior claim of title to the relevant Property Subdivision or portion thereof or that another Person is claiming the same; (b) defects arising out of lack of survey unless a survey is expressly required by Laws; (c) defects arising out of lack of corporate authorization, unless Buyer provides affirmative evidence that such corporate action was not authorized and results in another Person's superior claim of title to the relevant Property Subdivision or portion thereof or that another Person is claiming the same; (d) defects that have been cured by possession under the applicable statutes of limitations; (e) defects based solely on the existence of prior oil and gas leases relating to the Subject Interests that are expired and no longer in force and legal effect but not surrendered of record; (f) defects arising from a mortgage encumbering the oil, gas or mineral estate of any lessor if such mortgage would customarily be accepted in taking oil and gas leases and for which the lessee would not customarily seek a subordination of such mortgage to the Subject Interests affected thereby prior to conducting drilling activities on the Subject Interests (unless a complaint of foreclosure has been filed or any similar action taken by the mortgagee thereunder and in such case such mortgage has not been subordinated to the Subject Interests affected thereby or unless the mortgage requires notice to or consent from the mortgagee prior to entering into any oil and gas lease and such notice or consent was not delivered or obtained); (g) defects based solely on lack of information in files of Seller or the Company or references to documents if such documents are not in files of Seller or the Company; (h) Permitted Encumbrances; (i) defects based on a failure to record name changes or mergers set forth on Schedule 5.3(i) in the applicable records; (j) defects to Wells and Bakken Drillsite Spacing Units that result from an adjustment in the acreage contained within such Bakken Drillsite Spacing Unit as set forth on Part II(A) of Exhibit A resulting from the presence of irregular lots in the governmental survey of such Bakken Drillsite Spacing Unit; and (k) defects asserting that the Seller’s ownership in a Well is based on a right under a Contract or under a Law of any Governmental Authority entitling the Seller to a non-consenting owner's share in such Well.

Subdivision by a fraction, the numerator of which is the difference, if any, between (A) the actual Net Revenue Interest for such Title Defect Property, minus (B) the Net Revenue Interest for such Title Defect Property in Part II(A) of Exhibit A and the denominator of which is the Net Revenue Interest specified for such Property Subdivision in Part II(A) of Exhibit A.

promptly jointly instruct the Escrow Agent to release to the entitled party the amount of any reduction or increase in the Purchase Price to which Buyer or Seller, as applicable, is entitled.

Notwithstanding anything herein provided to the contrary, if a Title Defect results from any matter which could also result in the breach of any representation or warranty of Seller set forth in Section 3.1 (other than Section 3.1(m)), then Buyer shall only be entitled to assert such matter as a Title Defect pursuant to this ARTICLE 5 and shall be precluded from also asserting such matter as the basis of the breach of any such representation or warranty.

Notwithstanding anything herein provided to the contrary, there will be no reduction of the Purchase Price on account of a Title Defect and no amount owing by Seller unless and until the aggregate amount of all undisputed Title Defect Amounts with respect to the Title Defect Properties exceeds [***] (the “Title Defect Deductible”), and in such event, the reduction of the Purchase Price will be limited to the amount in excess of the Title Defect Deductible.

"Environmental Defect" means any condition or circumstance (other than any condition or circumstance set forth on Schedule 6.1) that, with notice to the Governmental Authority with jurisdiction, would require Remediation under Environmental Laws in, on or under a particular Well and related facilities (including air, land, soil, surface and subsurface strata, surface water, groundwater or sediments) or would cause a particular Well and related facilities to be in violation of any applicable requirements of Environmental Laws or Environmental Permits, in either case that is reasonably expected to require more than [***] to Remediate as to a particular Well and related facilities. "Environmental Defect Amount" means the cost to Remediate the Environmental Defect. "Environmental Defect Properties" means the Wells to which an Environmental Defect relates. Notwithstanding anything to the contrary, if the Environmental Defect Amount with respect to an Environmental Defect Property is [***] or less, then the Environmental Defect Amount with respect to such Environmental Defect shall be deemed to be zero.

Prior to 5:00 P.M., Mountain Time, on the Defect Notice Date, Buyer shall have the right, but not the obligation to notify Seller in writing of any matters that, in Buyer's reasonable opinion, constitute an Environmental Defect (an "Environmental Defect Notice"). Each Environmental Defect Notice shall be in writing and shall contain the following: (i) a description of the asserted Environmental Defect, (ii) the identity of the specific Subject Assets to which such Environmental Defect relates, (iii) the reason Buyer believes such Subject Assets to have an Environmental Defect, (iv) the Environmental Defect Amount attributable thereto claimed in good faith by Buyer, and (v) documentation supporting Buyer's asserted Environmental Defect. To be valid, any Environmental Defect Notice must be received by Seller prior to 5:00 P.M., Mountain Time, on the Defect Notice Date.

Buyer waives for all purposes all objections associated with the environmental condition of the Subject Assets (including Environmental Defects), unless raised in an Environmental Defect Notice prior to 5:00 P.M., Mountain Time, on the Defect Notice Date. If the aggregate amount of all Environmental Defects Amounts with respect to Environmental Defects, as applicable, timely asserted by Buyer is equal to or less than the Environmental Defect Deductible based on the estimates in the Environmental Defect Notice, Buyer shall be deemed to have (i) accepted the environmental condition(s) in, on and under the affected Subject Assets, (ii) waived its right to claim an Environmental Defect with respect to that particular condition in, on or under the affected Subject Assets, and (iii) included the particular environmental condition(s) as part of the Assumed Liabilities.

Seller shall have until the Closing Date, at its cost and expense, if it so elects but without obligation, to cure all or a portion of asserted Environmental Defects prior to such date with no adjustment to the Purchase Price in respect of such cured Environmental Defect.

If Seller and Buyer agree that an Environmental Defect exists and agree on the Environmental Defect Amount, and Seller has been unable, or elects not, to cure such Environmental Defect to the satisfaction of the Parties pursuant to Section 6.4, then Buyer shall be entitled, at its sole and exclusive option, to:

Notwithstanding anything herein provided to the contrary, there will be no reduction of the Purchase Price on account of an Environmental Defect and no amount owing by Seller unless and until the aggregate amount of all undisputed Environmental Defect Amounts with respect to the Environmental Defect Properties (not counting any Environmental Defect Properties that are excluded by Seller pursuant to Section 6.7) exceeds [***] (the “Environmental Defect Deductible”), and in such event, the reduction of the Purchase Price will be limited to the amount in excess of the Environmental Defect Deductible.

Notwithstanding anything herein provided to the contrary, with respect to any Environmental Defect Properties, Seller may elect prior to Closing to exclude such Environmental Defect Properties from the Subject Assets conveyed to the Company immediately prior to the Closing. If an Environmental Defect Property is excluded under Section 6.5(b) or this Section 6.7, as the case may be, then (a) all Subject Assets comprising such Environmental Defect Property together with a pro rata share of all incidental rights, oil, gas and other hydrocarbons and other assets attributable or appurtenant thereto, shall be retained by the Seller and shall not be considered part of the Subject Assets and (b) the Purchase Price shall be reduced by the Allocated Value attributable to such Subject Asset (the "Excluded Environmental Adjustment").

upon alleged Environmental Defects and/or Environmental Amounts that are Deferred Environmental Adjustment Claims in order to reach the threshold set forth therein, then the Parties will resolve all such Deferred Environmental Adjustment Claims under this Section 6.8 prior to Closing, and until all such Deferred Environmental Adjustment Claims are resolved, neither Party will be entitled to rely on the failure of the condition in Section 8.1(e) or Section 8.2(e), as applicable, to terminate this Agreement. With respect to each potential Deferred Environmental Adjustment Claim, Buyer and Seller shall deliver to the other a written notice describing each such potential Deferred Environmental Adjustment Claim, the amount in dispute and a statement setting forth the facts and circumstances that support such Party's position with respect to such Deferred Environmental Adjustment Claim, except Buyer shall pay that portion of the Purchase Price related to the Deferred Environmental Adjustment Claim into the Escrow Account. At Closing, the Purchase Price shall not be adjusted on account of, and, except as provided in Section 8.1(e) and Section 8.2(e), no effect shall be given to, the Deferred Environmental Adjustment Claim. On or prior to Deferred Matters Date, Seller and Buyer shall attempt in good faith to reach agreement on the Deferred Environmental Adjustment Claims and, ultimately, to resolve by written agreement all disputes regarding the Deferred Environmental Adjustment Claims. Following any written agreement regarding the Deferred Environmental Adjustment Claims, Seller and Buyer shall promptly jointly instruct the Escrow Agent to release to the entitled party the amount of escrow funds to which Buyer or Seller, as applicable, is entitled.

the release of such funds to Buyer, of the amount by which the Purchase Price would have been reduced at Closing on account of the Environmental Defects which constitute Deferred Environmental Adjustment Claims if same did not constitute Deferred Environmental Adjustment Claims.

Subject to (i) Buyer's termination right as provided in Section 13.1(a), (ii) Section 6.5, and (iii) any remedy for breach of any representations and warranties set forth in Section 3.1, the procedures set forth in this ARTICLE 6 shall be Buyer's sole remedy for the existence of any objections associated with the environmental condition of the Subject Assets (including Environmental Defects).

Buyer acknowledges that the Subject Assets have been used for exploration, development and production of oil and gas and that there may be petroleum, produced water, wastes, or other substances or materials located in, on or under the Subject Assets or associated with the Subject Assets. Equipment and sites included in the Subject Assets may contain asbestos, NORM or other Hazardous Materials. NORM may affix or attach itself to the inside of wells, materials, and equipment as scale, or in other forms. The wells, materials and equipment located on the Subject Assets or included in the Subject Assets may contain NORM and other wastes or Hazardous Materials. NORM containing material and/or other wastes or Hazardous Materials may have come in contact with various environmental media, including water, soils or sediment. Special procedures may be required for the assessment, remediation, removal, transportation, or disposal of environmental media, wastes, asbestos, NORM and other Hazardous Materials from the Subject Assets. Notwithstanding anything herein to the contrary, Buyer shall not be permitted to claim any Environmental Defect or breach of a representation or warranty set forth in Section 3.1 on the account of the presence of NORM on the properties underlying the Subject Assets.

Unless Buyer shall otherwise consent in writing (such consent not to be unreasonably delayed, conditioned or withheld), and except as set forth in Section 7.10 and those matters described on Schedule 3.1(k) or Schedule 7.2, Seller will not, and shall cause the Company not to, from the Execution Date through the Closing:

Seller and Buyer shall promptly consult with each other with regard to all press releases or other public announcements concerning this Agreement or the transactions contemplated herein, and, except as may be required by applicable Laws or the applicable rules and regulations of any Governmental Authority or stock exchange, neither Buyer nor Seller shall issue any such press release or other public announcement

concerning this Agreement or the transactions contemplated hereby that names the other Party without the prior written consent of the other Party, which shall not be unreasonably withheld or delayed. For the avoidance of doubt, either Party may disclose in a filing before the SEC or applicable Canadian securities regulatory authorities that a purchase and sale agreement has been signed and the associated purchase price.

Within 15 Business Days after the Closing, Seller shall deliver all Records to Buyer’s offices as directed by Buyer.

Seller and Buyer each agree that, from time to time, whether at or after the Closing Date, each of them will execute and deliver or cause their respective Affiliates to execute and deliver such further instruments of conveyance and transfer, including instruments of conveyance from Baytex Energy USA Ltd., and take such other action as may be reasonably necessary to carry out the purposes and intents of this Agreement, including (a) the completion of the Asset and Liability Transfer, (b) with regard to any Title Defects or Environmental Defects cured on or after Closing, as it relates to Seller, working with Buyer to assure that any cured Subject Asset shall be transferred to Buyer or the appropriate Affiliate of Buyer (as designated by Buyer) and (c) the fulfilling of the conditions to Closing set forth in Section 8.1 and Section 8.2.

Seller shall (and shall cause its respective Affiliates to) use commercially reasonable efforts to obtain, comply with or otherwise satisfy all Transfer Requirements set forth on Schedule 3.1(g). Seller shall not be obligated to pay any consideration to (or to incur any cost or expenses for the benefit of) the holder of any Transfer Requirements in order to obtain, comply with or otherwise satisfy the same.

If after the Execution Date and prior to the Closing any part of the Subject Assets shall be destroyed or damaged by fire or other casualty or if any part of the Subject Assets shall be taken in condemnation or under the right of eminent domain or if proceedings for such purposes shall be pending or threatened (a "Casualty Loss"), this Agreement shall remain in full force and effect notwithstanding any such destruction, damage, taking or proceeding or the threat thereof. To the extent insurance proceeds, condemnation awards or other payments are not committed, used or applied by Seller prior to the Closing Date to repair, restore or replace such destroyed, damaged or taken Subject Assets, Seller shall at the Closing (a) assign to the Company Seller's or any of its Affiliates’ right to receive all insurance or condemnation proceeds, awards or payments owed to Seller or any of its Affiliates by reason of such Casualty Loss, less any reasonable costs and expenses incurred by Seller or any of its Affiliates in collecting same or in connection with such proceedings or the threat thereof, and (b) pay to the Company all insurance or condemnation proceeds, awards or payments theretofore paid to Seller or any of its Affiliates by reason of such Casualty Loss, less any reasonable costs and expenses incurred by Seller or any of its Affiliates in collecting same or in connection with such proceedings or the threat thereof.

Buyer shall obtain no right, title, interest, license or any other right whatsoever to use the word "Baytex" or any derivative thereof of any trademarks containing or comprising the foregoing, or any

trademark confusingly similar thereto or dilutive thereof (collectively, the "Seller Marks"). From and after the Closing, Buyer agrees (a) to cease using and to cause the Company to cease using, the Seller Marks in any manner, directly or indirectly, (b) to remove, strike over or otherwise obliterate all Seller Marks from the assets of the Company and from all assets and all other materials owned, possessed or used by the Company within ninety (90) days after the Closing Date, (c) to use commercially reasonable efforts to cause any third parties identified by Seller prior to Closing that use or license Seller Marks in respect of the assets of the Company or on behalf of or with the consent of the Company, to remove, strike over or otherwise obliterate all Seller Marks from all materials owned, possessed or used by such third parties within ninety (90) days after the Closing Date and (d) to change the name of the Company to remove the name "Baytex" and to  amend the Organizational Documents of the Company to reflect such name change within ninety (90) days after the Closing Date and (e) to file such documents, reports and affidavits required by the State of North Dakota to evidence the change of name of the Company. The Parties agree, because damages would be an inadequate remedy, that a Party seeking to enforce this Section 7.8 shall be entitled to seek specific performance and injunctive relief as remedies for any breach thereof in addition to other remedies available at law or in equity.

respect to Transfer Taxes). Any expenses, fees or costs incurred by Seller in connection with preparing or filing such Tax Returns shall be paid by Buyer.

The Seller shall not, and shall cause its Affiliates and the Company not to, directly or indirectly, through any representative or otherwise, solicit or entertain offers from, provide any information to, negotiate with or in any manner encourage, or accept any proposal of any other Person relating to the acquisition of all, substantially all, or any material portion of the Subject Assets of the Seller or equity interests the Company,

or their assets or businesses, whether directly or indirectly, through purchase, merger, consolidation or otherwise.

evidence-of-insurability provisions and any waiting-period requirements under such plans; and (iii) Buyer shall apply towards any deductible requirements and out-of-pocket maximum limits under such welfare benefit plans that are applicable to 2014, any similar deductible requirements and out-of-pocket maximum limits satisfied by any Continuing Employee under Seller’s welfare benefit plans. Prior to Closing, Seller shall prepare and deliver, or cause to be prepared and delivered, to each Continuing Employee, and request such Continuing Employee to deliver to Buyer, a schedule setting forth the amount of the deductible and out-of-pocket maximum limits satisfied by each Continuing Employee under Seller welfare benefit plans with the information available as of the date the schedule is prepared, which schedule shall be updated through the Closing Date as soon as reasonably practicable after the Closing.

The obligation of Seller to proceed with the Closing is subject, at the option of Seller, to the satisfaction on or prior to the Closing Date of all of the following conditions:

The obligation of Buyer to proceed with the Closing is subject, at the option of Buyer, to the satisfaction on or prior to the Closing Date of all of the following conditions:

The Closing shall be held at 10:00 A.M., Mountain Time, at the offices of Davis Graham & Stubbs LLP, at 1550 17^th Street, Suite 500, Denver, Colorado, on September 24, 2014 (the "Scheduled Closing Date"), or, if all of the conditions to Closing set forth in Article 8 have been satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date) as of such date, on the date that is five (5) days following satisfaction (or waiver) of such conditions, or at such other time or on such other date at such other place as Seller and Buyer may otherwise agree in writing (the day on which the Closing takes place being the "Closing Date").

At Closing, Seller shall:

At Closing, Buyer shall:

No representation, warranty, covenant or agreement made herein shall survive the Closing except as provided in this Section 10.1. Each representation, warranty, covenant and agreement made herein shall terminate and cease to be of further force and effect as of the Closing or such later date after Closing as is expressly stipulated in this Section 10.1 for the survival thereof. Following the Closing or such later date stipulated in this Section 10.1 for the survival thereof, such representation, warranty, covenant or agreement shall not form the basis for or give rise to any claim, demand, cause of action, counterclaim, defense, damage, indemnity, obligation or liability which is asserted, claimed, made or filed following the Closing or such later date stipulated in this Section 10.1 for survival. It is expressly agreed that the terms and provisions of (a) ARTICLE 3 shall survive for twelve (12) months following the Closing, except that (i) Section 3.1(i) shall survive the Closing until sixty (60) days following the expiration of the applicable statutes of limitations (including extensions) for the subject Taxes and (ii) Seller's representations and warranties set forth set forth in Section 3.1(a), Section 3.1(b), Section 3.1(m), Section 3.1(w), Section 3.1(x), Section 3.2(a), Section 3.2(b), Section 3.2(c) and Section 3.2(i) (the "Fundamental Representations") and Buyer representations and warranties set forth in Section 3.3 shall, in each case, survive the Closing indefinitely, (b) Section 2.5, Section 2.6, Section 4.2, ARTICLE 5, ARTICLE 6, ARTICLE 10, ARTICLE 11, ARTICLE 12, ARTICLE 14, and Buyer's indemnity and hold harmless of the Seller Indemnified Parties under Section 4.1, shall survive the Closing indefinitely or for such shorter period of time as may be stipulated in such provisions and (c) the covenants contained herein shall survive in accordance with their terms. In addition, the definitions set forth in Appendix A to this Agreement which are used in the representations, warranties, covenants and agreements which survive the Closing pursuant to this Section 10.1 shall survive the Closing to the extent necessary to give operative effect to such surviving representations, warranties, covenants and agreements.

Both Parties acknowledge that the limitations on survival in Section 10.1 are a contractual statute of limitations that limits such Party's ability to make a claim against the other Party or, with respect to Buyer, the Company, which such Party may otherwise have available under Law.

NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF THIS AGREEMENT, IT IS THE EXPLICIT INTENT OF EACH PARTY THAT SELLER IS NOT MAKING ANY REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, BEYOND THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY GIVEN IN THIS AGREEMENT AND THE SPECIAL WARRANTY OF TITLE PURSUANT TO THE GENERAL CONVEYANCE, AND IT IS UNDERSTOOD THAT, WITHOUT LIMITING SUCH EXPRESS REPRESENTATIONS AND WARRANTIES, SELLER'S INTEREST IN THE COMPANY AND THE ASSETS OF THE COMPANY ARE BEING TRANSFERRED AS IS AND WHERE IS AND WITH ALL FAULTS. WITHOUT LIMITING THE GENERALITY OF THE IMMEDIATELY PRECEDING SENTENCE, SELLER HEREBY (a) EXPRESSLY DISCLAIMS AND NEGATES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE, RELATING TO (i) THE CONDITION OF THE SUBJECT ASSETS (INCLUDING, WITHOUT LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR THE PRESENCE OR ABSENCE OF ANY HAZARDOUS MATERIALS IN OR ON, OR DISPOSED OF OR DISCHARGED FROM, THE SUBJECT ASSETS) OR (ii) ANY INFRINGEMENT BY SELLER OR ANY OF ITS AFFILIATES OF ANY PATENT OR PROPRIETARY RIGHT OF ANY PERSON; AND (b) NEGATES ANY RIGHTS OF BUYER UNDER STATUTES TO CLAIM DIMINUTION OF CONSIDERATION AND ANY CLAIMS BY BUYER FOR DAMAGES BECAUSE OF DEFECTS, WHETHER KNOWN OR UNKNOWN, IT BEING THE INTENTION OF SELLER AND BUYER THAT SELLER'S INTEREST IN THE COMPANY AND THE ASSETS OF THE COMPANY ARE BEING TRANSFERRED TO AND ACCEPTED BY BUYER IN THEIR PRESENT CONDITION AND STATE OF REPAIR.

NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF THIS AGREEMENT, SELLER AND BUYER AGREE THAT, EXCEPT FOR THE AMOUNT SPECIFICALLY STIPULATED IN SECTION 13.2, THE RECOVERY BY ANY PARTY OF ANY DAMAGES SUFFERED OR INCURRED BY IT AS A RESULT OF ANY BREACH BY ANOTHER PARTY OF ANY OF ITS REPRESENTATIONS, WARRANTIES OR OBLIGATIONS UNDER THIS AGREEMENT SHALL BE LIMITED TO THE ACTUAL DAMAGES SUFFERED OR INCURRED BY THE NON-BREACHING PARTY (AND THE INDEMNIFIED PERSONS TO WHICH SUCH OBLIGATIONS MAY EXTEND UNDER THE EXPRESS TERMS HEREOF) AS A RESULT OF THE BREACH BY THE BREACHING PARTY OF ITS REPRESENTATIONS, WARRANTIES OR OBLIGATIONS HEREUNDER AND IN NO EVENT SHALL THE BREACHING PARTY BE LIABLE TO THE NON-BREACHING PARTY OR ANY INDEMNIFIED PERSON FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES (INCLUDING ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES, BUSINESS INTERRUPTION OR LOST OR DELAYED PRODUCTION) SUFFERED OR INCURRED BY THE NON-BREACHING PARTY OR ANY INDEMNIFIED PERSON AS A RESULT OF THE BREACH BY THE BREACHING PARTY OF ANY OF ITS REPRESENTATIONS, WARRANTIES OR OBLIGATIONS HEREUNDER. For purposes of the foregoing, actual damages may, however, include indirect, consequential, special, exemplary

or punitive damages to the extent (a) the injuries or losses resulting in or giving rise to such damages are incurred or suffered by a Person which is not a Seller Indemnified Party, a Buyer Indemnified Party or an Affiliate of any of the foregoing and (b) such damages are recovered against an Indemnified Person by a Person which is not a Seller Indemnified Party, a Buyer Indemnified Party or an Affiliate of any of the foregoing. This Section 11.2 shall operate only to limit a Party's liability and shall not operate to increase or expand any contractual obligation of a Party or cause any contractual obligation of a Party to survive longer than provided in Section 10.1.

FROM AND AFTER THE CLOSING, SUBJECT TO THE LIMITATIONS OF SECTION 10.1 AND ARTICLE 11, BUYER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS THE SELLER INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL (a) ASSUMED LIABILITIES INCURRED BY OR ASSERTED AGAINST ANY OF THE SELLER INDEMNIFIED PARTIES, INCLUDING ANY ASSUMED LIABILITY BASED ON NEGLIGENCE, GROSS NEGLIGENCE OR STRICT LIABILITY OF THE COMPANY OR ANY SELLER INDEMNIFIED PARTY OR ANY OTHER THEORY OF LIABILITY, WHETHER IN LAW (WHETHER COMMON OR STATUTORY) OR EQUITY (SO LONG AS SUCH ASSUMED LIABILITIES ARE NOT COVERED LIABILITIES FOR WHICH BUYER IS ENTITLED TO INDEMNIFICATION PURSUANT TO SECTION 12.2), AND (b) COVERED LIABILITIES RESULTING FROM ANY MISREPRESENTATION, BREACH OF ANY REPRESENTATION OR WARRANTY OR NONFULFILLMENT OF ANY COVENANT OR AGREEMENT ON THE PART OF BUYER INCLUDED IN THIS AGREEMENT OR THE CERTIFICATES DELIVERED UNDER SECTION 8.2(b).

FROM AND AFTER THE CLOSING, SELLER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS THE BUYER INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL (a) RETAINED LIABILITIES AND (b) COVERED LIABILITIES (i) RESULTING FROM EXCLUDED ENVIRONMENTAL DEFECT PROPERTIES UNDER SECTION 6.5 OR SECTION 6.7, AND (ii) SUBJECT TO THE PROVISIONS OF SECTION 10.1, SECTION 12.3, AND ARTICLE 11, RESULTING FROM ANY MISREPRESENTATION, BREACH OF ANY REPRESENTATION OR WARRANTY OR NONFULFILLMENT OF ANY COVENANT OR AGREEMENT ON THE PART OF SELLER INCLUDED IN THIS AGREEMENT OR THE CERTIFICATES DELIVERED UNDER SECTION 8.1(b).

A Person that desires to make a claim for indemnification under this ARTICLE 12 is herein referred to as an "Indemnified Person" and the Party from which indemnification is sought under this ARTICLE 12 is herein referred to as the "Indemnifying Party." All claims for indemnification under this ARTICLE 12 shall be asserted and resolved as follows:

(ii) setting forth the full name, address for all notices and the authorized representatives of such Indemnified Person with respect to such Indemnified Claim, and (iii) describing in reasonable detail the nature of the Indemnified Claim, including a copy of all papers served with respect to such Indemnified Claim (if any) and the basis of such request for indemnification hereunder. Failure to provide such Claim Notice promptly shall not affect the right of the Indemnified Person to indemnification hereunder except to the extent the Indemnifying Party is prejudiced thereby; provided that the Indemnifying Party shall not be obligated to defend, indemnify or otherwise hold harmless an Indemnified Person with respect to a third party claim until a Claim Notice meeting the foregoing requirements is furnished to the Indemnifying Party by the Indemnified Person. Within thirty (30) days after receipt of any Claim Notice (the "Election Period") from a Party, the Indemnifying Party shall notify the Indemnified Person (A) whether the Indemnifying Party disputes its obligation to indemnify the Indemnified Person with respect to such third party claim and (B) whether the Indemnifying Party desires to defend the Indemnified Person against such third party claim; provided that, if the Indemnifying Party fails to so notify the Indemnified Person during the Election Period, the Indemnifying Party shall be deemed to have elected to dispute such liability and not to defend against such third party claim.

received from a third party (including any insurer) less any cost associated with receiving such recovery in respect of a claim.

Seller and Buyer acknowledge and agree that from and after the Closing, the indemnification provisions of this ARTICLE 12 and those obligations contained in the Parent Guaranty are the sole and exclusive remedy of Seller and Buyer for the breach of any representation or warranty or nonfulfillment of any covenant or agreement on the part of Seller or Buyer under this Agreement or confirmed in any certificate delivered pursuant hereto, and Seller does hereby release, acquit and forever discharge all Buyer Indemnified Parties and Buyer does hereby release, acquit, and forever discharge all Seller Indemnified Parties from any such other remedies; provided, however, that either Party shall be entitled to pursue all remedies available at Law or in equity (including specific performance and injunctive relief without the necessity of posting bond) for any breach by the other Party of the provisions of Section 4.2(b) or Section 4.2(c), as the case may be.

Notwithstanding anything contained herein to the contrary, for purposes of determining the amount of liabilities associated with a breach of any representation or warranty by any Party hereunder (but not for purposes of determining whether a breach has occurred), the representations and warranties of such Party shall, for purposes of this ARTICLE 12, be read without giving effect to any materiality, Material Adverse Effect or qualification with a similar meaning in such representation or warranty.

In the event Covered Liabilities suffered by an Indemnified Party are recoverable under more than one provision of this Agreement, such Indemnified Party will only be permitted to recover with respect to any particular Covered Liabilities suffered by it one time as it is the Parties' intent that once any particular Covered Liabilities have been recovered by a particular Indemnified Party under one provision, such Covered Liability no longer exists with respect to such Indemnified Party and, therefore, recovery by such particular Indemnified Party for such same Covered Liabilities under another provision would constitute unintended and prohibited "double" recovery. No Buyer Indemnified Party shall be entitled to any claim for Covered Liabilities under Section 12.2 arising from claims based on the determination of the Final Settlement Statement, as it is the intent that the procedures set forth in Article 2 be the exclusive remedy for such claims.

waived by Seller, or (B) by Buyer if any condition specified in Section 8.2 has not (1) been satisfied on or before the Termination Effective Time or (2) been waived by Buyer; provided, in each case, that the failure to consummate the transactions contemplated hereby on or before such time did not result from the failure by the Party seeking termination of this Agreement to fulfill any undertaking or commitment provided for herein on the part of such Party that is required to be fulfilled on or prior to the Closing.

and all losses or damages suffered or incurred by Seller or any of its Affiliates or any other Person in connection with this Agreement (and the termination hereof), the transactions contemplated hereby (and the abandonment thereof) or any matter forming the basis for such termination and (ii) except as set forth in the proviso below, upon Seller's receipt of the Cash Deposit, be the sole and exclusive remedy of Seller and its Affiliates against the Buyer Indemnified Parties for any loss or damage suffered as a result of the failure of the transactions contemplated by this Agreement to be consummated or for a breach or failure to perform hereunder, under the Commitment Letter or otherwise and (B) except as set forth in the proviso below, none of the Buyer Indemnified Parties shall have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated hereby; provided, however, if Buyer Willfully Breaches this Agreement in a manner causing a failure of a closing condition in Section 8.1, Seller shall be entitled to retain the Cash Deposit and pursue compensation from Buyer for any and all losses or damages suffered or incurred by Seller or any of its Affiliates in connection with this Agreement (and the termination hereof), the transactions contemplated hereby (and the abandonment thereof) or any matter forming the basis for such termination, provided that the Seller’s right to recovery in such circumstance shall be limited to [***], with such amount to be offset by the Cash Deposit. Notwithstanding the foregoing, Buyer shall continue to be bound by its obligations set forth in ARTICLE 4 after any termination by any Party, and Seller shall be entitled to pursue all remedies available at Law or in equity (including specific performance and injunctive relief without the necessity of posting bond) for any breach by Buyer of such obligations.

This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to such other Party.

Unless otherwise expressly provided in this Agreement, all notices required or permitted hereunder shall be in writing and deemed sufficiently given for all purposes hereof if (a) delivered in person, by courier or by registered or certified United States Mail to the Person to be notified, with receipt obtained, or (b) sent by facsimile, with "answer back" or other "advice of receipt" obtained, in each case to the appropriate address or number as set forth below. Each notice shall be deemed effective on receipt by the addressee as aforesaid; provided that, notice received by facsimile after 5:00 P.M. at the location of the addressee of such notice shall be deemed received on the first Business Day following the date of such electronic receipt.

or at such other address or to such other facsimile number and to the attention of such other Person as Seller may designate by written notice to Buyer.

With copy (which shall not constitute notice) to:

1775 Sherman Street, Suite 1200

Denver, CO 80203

Attention: David W. Copeland

Facsimile: 303 ###-###-####

or at such other address or to such other facsimile number and to the attention of such other Person as Buyer may designate by written notice to Seller.

This Agreement, the Appendix, Exhibits and Schedules hereto, the Confidentiality Agreement and the Deposit Escrow Agreement contain the entire agreement among the Parties with respect to the subject matter hereof and there are no agreements, understandings, representations or warranties among

the Parties other than those set forth or referred to herein. The headings herein are for convenience only and shall have no significance in the interpretation hereof.

Buyer shall be responsible for all recording, filing or registration fees relating to the filing, recording or registration of any instruments transferring title to the Membership Interests to Buyer from Seller. All other costs and expenses incurred by each Party in connection with all things required to be done by it hereunder, including attorneys' fees, accountant fees and the expense of title examination, shall be borne by the Party incurring same. Any recordation fees incurred in connection with the transfer of the Subject Assets to the Company pursuant to Section 7.10 shall be borne 100% by Buyer.

This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns; provided, however, the respective rights and obligations of the Parties shall not be assignable or delegable by any Party without the express written consent of each non-assigning or non-delegating Party. Any purported assignment or delegation without such consent is void.

This Agreement may not be modified or amended except by an instrument or instruments in writing signed by the Party against whom enforcement of any such modification or amendment is sought. Any Party may, only by an instrument in writing, waive compliance by another Party with any term or provision of this Agreement on the part of such other Party. The waiver by any Party of a breach of any term or provision of this Agreement shall not be construed as a waiver of any subsequent breach.

The substantially prevailing Party or Parties in any legal proceeding brought under or to enforce this Agreement shall be additionally entitled to recover court costs and reasonable attorneys' fees from the non-substantially prevailing Party or Parties.

If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any adverse manner to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

The Appendix and all Schedules and Exhibits hereto which are referred to herein are hereby made a part of this Agreement and incorporated herein by such reference.

It is expressly agreed that this Agreement shall not be construed against any Party, and no consideration shall be given or presumption made, on the basis of who drafted this Agreement or any particular provision hereof or who supplied the form of Agreement. Each Party agrees that this Agreement has been purposefully drawn and correctly reflects its understanding of the transactions that this Agreement contemplates. In construing this Agreement:

Except to the extent provided in ARTICLE 12, this Agreement is for the sole benefit of Buyer and Seller and their respective successors and assigns as permitted herein and no other Person shall be entitled to enforce this Agreement, rely on any representation, warranty, covenant or agreement contained herein, receive any rights hereunder or be a third party beneficiary of this Agreement. Any Indemnified Person which is a third Person shall be indemnified and held harmless under the terms of this Agreement only to the extent that a Party expressly elects to exercise such right of indemnity and hold harmless on behalf of such third Person Indemnified Person pursuant to ARTICLE 12; and no Party shall have any direct liability or obligation to any third Person or be liable to any third Person for any election or non-election or any act or failure to act under or in regard to any term of this Agreement. Any claim for indemnity or hold harmless hereunder on behalf of an Indemnified Person must be made and administered by Buyer or Seller, as the case may be.

Without limiting any Party's right to file suit to enforce its rights under this Agreement, the Parties expressly covenant and agree not to record or place of record this Agreement or any copy or memorandum hereof; provided, however, that any Party shall have the right to file all or any part of this Agreement (including any document executed by any of the Parties in connection herewith) with the SEC in connection with any filing that a Party in good faith believes is required by Law or any national securities exchange.

Time is of the essence in this Agreement. If the date specified in this Agreement for giving notice or taking action is not a Business Day (or if the period during which any notice is required to be given or any action taken expires on a date which is not a Business Day), then the date for giving such notice or taking such action (and the expiration date of such period during which notice is required is given or action taken) shall be the next day which is a Business Day.

IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each of the Parties on the day first above written to be effective as of the Effective Time.

"Action" shall mean any action, suit or other proceeding by or before any Governmental Authority or any arbitration proceeding before any arbitral tribunal.

"Adjusted Purchase Price" shall be as defined in Section 2.2.

"Adjustment Period" shall be as defined in Section 2.5(c).

"Affiliate" shall mean, with respect to any Person, any other Person that directly or indirectly (through one or more intermediaries or otherwise) Controls, is Controlled by, or is under common Control with the first Person. No Person shall be deemed an Affiliate of any Person by reason of the exercise or existence of rights, interests or remedies under this Agreement.

"Agreement" shall be as defined in the Preamble.

"Allocated Value" shall be as defined in Section 5.2(b).

"Allocation Schedule" shall be as defined in Section 7.9(f).

"Allocation Amount" shall be as defined in Section 7.9(f).

"Asset and Liability Transfer" shall be as defined in Section 7.10(a).

"Asset Taxes" shall mean all Property Taxes and Severance Taxes.

"Assumed Liabilities" shall mean (i) all Covered Liabilities arising out of or attributable to (a) the ownership, use, construction, maintenance or operation of the Subject Assets after the Effective Time, (b) the obligation to plug and abandon any well included in the Subject Assets (whether arising prior to or after the Effective Time) and (c) the obligation to properly pay and disburse the funds comprising the Suspense Funds to the proper Person, irrespective of whether such Suspense Funds are attributable to oil, gas or other hydrocarbons produced from the Subject Interests before or after the Effective Time, and (ii) all Environmental Liabilities, known or unknown, arising out of or attributable to the ownership, use, construction, maintenance or operation of the Subject Assets at any time (whether arising prior to or after the Effective Time).

"Assumption Agreement" shall be as defined in Section 7.11(c).

"Bakken Drillsite Spacing Unit" shall be as defined in the definition of "Subject Assets" set forth in this Appendix A.

"Bakken Pool" means that interval from fifty (50) feet above the upper Bakken shale being the top of the Bakken Pool, being  the stratigraphic equivalent of  8,569 feet (as measured from the Kelly Bushing), to one

hundred (100) feet below the top of the Three Forks formation, measured at a depth of 8,823 feet (as measured from the Kelly Bushing), being the base of the Bakken Pool, as measured depth in the Dual Laterolog MSFL, Gearhart Logging, Run 1, logged October 3, 1985 in the No. 1 Knudsvig 14-1 well, located 660 feet south and 660 feet west, Section 1, Township 161 North, Range 100 West, Divide County, North Dakota, API #33023003560000.

"Business" means the ownership and operation of the Subject Assets.

"Business Day" shall mean any day that is not a Saturday, Sunday or legal holiday recognized by the State of Colorado, the Province of Alberta or the United States of America.

"Buyer Indemnified Parties" shall mean Buyer, Buyer's Affiliates and each of Buyer's and its Affiliate's respective past, present and future partners, directors, officers, employees, consultants, agents and other representatives.

"Buyer" shall be as defined in the Preamble.

"Cash Deposit" shall be as defined in Section 2.3.

"Casualty Loss" shall be as defined in Section 7.7.

"Claim Notice" shall be as defined in Section 12.3(a).

"Closing" shall mean the consummation of the transactions contemplated by ARTICLE 9.

"Closing Amount" shall be as defined in Section 2.4.

"Closing Date" shall be as defined in Section 9.1.

"Closing Time" shall be as defined in Section 2.5(c).

"Code" shall mean the Internal Revenue Code of 1986, as amended.

"Company" shall be as defined in the Recitals.

"Confidentiality Agreement" shall mean that certain Confidentiality Agreement dated May 30, 2014, by and between Seller and Buyer.

"Contracts" shall be as defined in the definition of "Subject Assets" set forth in this Appendix A.

"Control" shall mean the power to direct or cause the direction of the management and policies of a Person, whether through the ability to exercise voting power, by contract or otherwise; and "Controlled by" and "Controlling" have the meaning correlative thereto.

"Covered Liabilities" shall mean any and all debts, losses, liabilities, duties, claims (including those arising out of any demand, assessment, settlement, judgment or compromise relating to any actual or threatened Action), Taxes, fees, penalties, costs and expenses (including any attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending any Action), matured or unmatured, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, known or unknown, including any of the

foregoing arising under, out of or in connection with any Action, any order or consent decree of any Governmental Authority, any award of any arbitrator, or any Law, contract, commitment or undertaking.

"Deductible Amount" shall be as defined in Section 12.4(a)(iii).

"Defect Notice Date" shall be as defined in Section 5.2(a).

"Defensible Title" shall mean such title of the Seller to a Property Subdivision that:

"Deferred Adjustment Claim" shall be as defined in Section 5.5(a).

"Deferred Environmental Adjustment Claim" shall be as defined in Section 6.8(a).

"Deferred Matters Date" shall be as defined in Section 5.5(a).

"Deposit Escrow Agreement" shall be as defined in Section 2.3.

"Effective Time" shall mean 7:00 A.M. at the location of the Subject Assets on July 1, 2014.

"Election Period" shall be as defined in Section 12.3(a).

"Environmental Arbitrator" shall be as defined in Section 6.8(b).

"Environmental Defect" shall be as defined in Section 6.1.

"Environmental Defect Adjustment" shall be as defined in Section 6.5(a).

"Environmental Defect Amount" shall be as defined in Section 6.1.

"Environmental Defect Deductible" shall be as defined in Section 6.6.

"Environmental Defect Notice" shall be as defined in Section 6.2.

"Environmental Defect Properties" shall be as defined in Section 6.1.

"Environmental Laws" shall mean all Laws pertaining to pollution, remediation of contamination, protection of the environment and natural resources, and restoration of environmental quality, including the following federal statutes and the regulations promulgated thereunder: (a) the Comprehensive Environmental Response, Compensation and Liability Act of 1980; (b) the Emergency Planning and Community Right-to-

Know Act; (c) the Resource Conservation and Recovery Act; (d) the Clean Air Act; (e) the Clean Water Act; (f) the Safe Drinking Water Act; and (g) the Toxic Substances Control Act; and any state or local laws and regulations similar thereto, as each of the foregoing has been amended and is in effect on the Defect Notice Date.

"Environmental Liabilities" means all liabilities, obligations, responsibilities, remedial actions, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants and costs of investigation and feasibility studies), fines, penalties, sanctions, supplemental environmental projects in lieu of any fines, penalties or sanctions, and interest incurred as a result of any claim or demand by any Person or in response to any violation of or liability under Environmental Law, whether known or unknown, accrued or contingent, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, to the extent based upon, related to, or arising under or pursuant to any Environmental Law, permit, order or agreement with any Governmental Authority or other Person, which relates to any environmental, health or safety condition, violation of Environmental Law or a release or threatened release of, or exposure to, Hazardous Materials and/or NORM, including all obligations and liabilities, known or unknown, with respect to the Subject Assets, relating to on- or off-site ground water, surface water, sediment, or soil in accordance with applicable agreements and Laws, including any obligations to pay for or perform the assessment, remediation, removal or disposal of NORM, asbestos, mercury, polychlorinated biphenyls, drilling fluids and chemicals, produced waters and hydrocarbons, hazardous substances, or other liabilities arising under or relating to Environmental Laws or environmental obligations in applicable agreements with respect to the Subject Assets.

"Environmental Permits" shall be as defined in Section 3.1(l)(i)(B).

"Equipment" shall be as defined in the definition of "Subject Assets" set forth in this Appendix A.

"Escrow Account" shall be as defined in Section 2.3.

"Escrow Agent" shall be as defined in Section 2.3.

"Excluded Environmental Adjustment" shall be as defined in Section 6.7.

"Final Settlement Date" shall be as defined in Section 2.6.

"Final Settlement Statement" shall be as defined in Section 2.6.

"Flat Reps" shall be as defined in Section 8.2(a).

"Fundamental Representations" shall be as defined in Section 10.1.

"General Conveyance" shall be as defined in Section 7.11(c).

"Governmental Authority" shall mean the United States of America and Canada, and any state, province, county, municipality or other governmental subdivision thereof, and any court or any governmental department, commission, board, bureau, agency or other instrumentality thereof.

"Hazardous Materials" shall mean petroleum substances (including crude oil and any components, fractions, by-products or derivatives thereof), exploration and production wastes, any substance defined or regulated as a hazardous substance, toxic substance, hazardous waste, hazardous material, radioactive

material, radioactive waste, pollutant, or contaminant by any Environmental Law, including asbestos, polychlorinated biphenyls, and naturally occurring radioactive materials, and any other chemical, pollutant, contaminant, substance or waste that is regulated or for which liability or standards of care are imposed under any Environmental Law.

"Hedge Agreement" means any and all transactions, agreements or documents now existing or hereafter entered into, which provide for an interest rate, credit or commodity swap, cap, floor, collar or any combination of, or option with respect to, these or similar transactions.

"Hydrocarbon Interests" shall mean (a) mineral servitudes and leases affecting, relating to or covering any oil, gas and other hydrocarbons in place and the leasehold interests and estates in the nature of working or operating interests under such leases, as well as overriding royalties, net profits interests, production payments, carried interests, rights of recoupment and other interests in, under or relating to such leases, (b) fee interests in oil, gas or other hydrocarbons in place, (c) royalty interests in oil, gas or other hydrocarbons in place, (d) any other interest in oil, gas or other hydrocarbons in place, (e) any economic or contractual rights, options or interests in and to any of the foregoing, including any sublease, farmout or farmin agreement or production payment affecting any interest or estate in oil, gas or other hydrocarbons in place, and (f) any and all rights and interests attributable or allocable thereto by virtue of any pooling, unitization, communitization, production sharing or similar agreement, order or declaration.

"Imbalance" shall mean any imbalance at the wellhead between the amount of oil, gas or other hydrocarbons produced from a well and allocable to the interests of the Company therein and the production from the relevant well to which the Company is entitled, together with any appurtenant rights and obligations concerning future in kind and/or cash balancing at the wellhead.

"Income Taxes" shall mean all Taxes based upon, measured by, or calculated with respect to (a) gross or net income or gross or net receipts or profits (including franchise Tax and any capital gains, alternative minimum Taxes, net worth and any Taxes on items of Tax preference, but not including sales, use, goods and services, real or personal property transfer or other similar Taxes), (b) multiple bases (including corporate franchise, doing business or occupation Taxes) if one or more of the bases upon which such Tax may be based upon, measured by, or calculated with respect to, is described in clause (a) above, or (c) withholding Taxes measured with reference to or as a substitute for any Tax described in clauses (a) or (b) above, and (d) and any penalties, additions to Tax, and interest levied or assessed with respect to a Tax described in (a), (b), or (c).

"Indemnified Claim" shall be as defined in Section 12.3(a).

"Indemnified Person" shall be as defined in Section 12.3.

"Indemnifying Party" shall be as defined in Section 12.3.

"Independent Accounting Firm" shall be as defined in Section 2.6.

"Intended Tax Treatment" shall be as defined in Section 7.9(a).

"Knowledge" shall mean the actual knowledge (excluding any imputed or implied knowledge of any kind) of any fact, circumstance or condition by Dan Anderson, Tim Morris, Randy Verret, and Wayne King.

"Lands" shall be as defined in the definition of "Subject Assets" set forth in this Appendix A.

"Law" shall mean any applicable statute, law (including the common law), ordinance, regulation, rule, ruling, order, restriction, requirement, writ, injunction, decree or other official act of or by any Governmental Authority.

"Leases" shall be as defined in the definition of "Subject Assets" set forth in this Appendix A.

"Lien" shall mean any mortgage, pledge, lien, security interest, or other encumbrance.

"Material Adverse Effect" shall mean any result, consequence, condition or matter which (a) materially adversely affects the Subject Assets, taken as a whole, or the ownership, operations, results of operations or the value of the Subject Assets, taken as a whole (after taking into account, in each case, any insurance, condemnation award, indemnity and other recoveries payable in respect thereof) or (b) materially impairs, prevents or delays Seller's ability to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement; provided that the following shall not be deemed to constitute a Material Adverse Effect: any effect resulting from (i) any change in economic, industry, financial, market, political, general or regional conditions, (ii) any change in Law, regulatory policy or accounting rules, (iii) entering into this Agreement or the announcement of the transactions contemplated by this Agreement, (iv) any matter, contract or agreement set forth on an exhibit or schedule hereto as of the date hereof or (v) any change arising in connection with any natural disasters, hostilities, acts of war, sabotage or terrorism.

"Material Contract" shall mean, to the extent binding upon the Subject Assets or the Company from and after Closing, any contract or agreement which is one or more of the following types:

"Membership Interest" shall mean the rights of Seller as a Member under the Limited Liability Company Agreement of the Company to be entered into by the Seller prior to the Closing.

"Net Revenue Interest" shall mean an interest (expressed as a percentage or decimal fraction) in and to all oil and gas produced and saved from or attributable to a Property Subdivision, after giving effect to all royalties, overriding royalties, production payments, net profits interests and other burdens.

"NORM" shall mean naturally occurring radioactive material.

"Organizational Documents" means, the Certificate of Formation and the Operating Agreement of the Company attached hereto as Exhibit G.

“Parent Guaranty” means the guaranty of Seller’s indemnity obligations hereunder, in the form attached hereto as Exhibit F, to be entered into by Baytex Energy Corp. and Buyer at the Closing.

"Party" and "Parties" shall be as defined in the Preamble.

"Permits" shall be as defined in Section 3.1(e).

"Permitted Encumbrances" shall mean any of the following matters:

"Person" shall mean any Governmental Authority or any individual, firm, partnership, corporation, limited liability company, association, joint venture, trust, unincorporated organization or other entity or organization.

"Preference Right" shall mean any right or agreement that enables or may enable any Person to purchase or acquire any Subject Asset or any interest therein or portion thereof as a result of or in connection with (a) the sale, assignment, encumbrance or other transfer of any Subject Asset or any interest therein or portion thereof or (b) the execution or delivery of this Agreement or the consummation or performance of the terms and conditions contemplated by this Agreement.

"Preliminary Settlement Statement" shall be as defined in Section 2.5(a).

"Property Expenses" shall be as defined in Section 2.5(c).

"Property Subdivision" shall mean each Bakken Drillsite Spacing Unit or Well described or referenced in Part II(A) of Exhibit A.

"Property Taxes" shall mean all ad valorem, real property, personal property, and all other Taxes and similar obligations, and any penalties, additions to Tax, and interest levied or assessed thereon, assessed against the Subject Assets or based upon or measured by the ownership of the Subject Assets, but not including Income Taxes, Severance Taxes, or Transfer Taxes.

"Purchase Price" shall be as defined in Section 2.2.

"Records" shall be as defined in the definition of "Subject Assets" set forth in this Appendix A.

"Release" shall mean any depositing, spilling, leaking, pumping, pouring, placing, emitting, discarding, abandoning, emptying, discharging, migrating, injecting, escaping, leaching, dumping or disposing into the environment.

"Remediation" or "Remediate" shall mean investigation, assessment, characterization, delineation, monitoring, sampling, analysis, removal action, remedial action, response action, corrective action, mitigation, treatment or cleanup of Hazardous Materials or other similar actions as required by any applicable Environmental Laws with respect to soil, land surface, groundwater, sediment, surface water, the ambient environment or subsurface strata or otherwise for the protection of human health and the environment or to restore a property or operation to compliance with Environmental Laws.

"Retained Liabilities" means all Seller’s Covered Liabilities arising out of or attributable to the ownership, use, construction, maintenance or operation of any assets other than the Subject Assets.

"SEC" shall mean the United States Securities and Exchange Commission or any successor to such agency.

"Securities Act" shall mean the Securities Act of 1933, as amended.

"Seller" shall be as defined in the Preamble.

"Seller Affiliated Group" means the affiliated group, as defined in Section 1504(a) of the Code, of which Seller is a member.

"Seller Indemnified Parties" shall mean Seller, Seller's Affiliates and each of Seller's and its Affiliate's respective past, present and future shareholders, directors, officers, employees, consultants, agents and other representatives.

"Seller Marks" shall be as defined in Section 7.8.

"Seller Title Credit" shall be as defined in Section 5.4(a).

"Seller Title Credit Amount" shall be as defined in Section 5.4(a).

"Seller Title Credit Notice" shall be as defined in Section 5.2(a).

"Settled Asset Taxes" shall be as defined in Section 7.9(c).

"Settled Property Taxes" shall be as defined in Section 7.9(b)(i).

"Settled Severance Taxes" shall be as defined in Section 7.9(c).

“Severance Amount” means, with respect to the Business Employees, the amounts set forth on a schedule provided to Buyer by Seller on the Execution Date.

"Severance Taxes" shall mean all extraction, production, gross production, excise, net proceeds, severance, windfall profit, and all other similar Taxes, and any penalties, additions to such Taxes, and interest levied or assessed thereon, with respect to the Subject Assets that are based upon or measured by the production of hydrocarbons or the receipt of proceeds therefrom, but not including Property Taxes, Income Taxes, and Transfer Taxes.

"Subject Assets" shall mean all of the Company's right, title, and interest in and to the following assets and properties:

"Subject Interests" shall be as defined in the definition of "Subject Assets" set forth in this Appendix A.

"Surface Contracts" shall be as defined in the definition of "Subject Assets" set forth in this Appendix A.

"Suspense Funds" shall mean the amounts set forth on Schedule 3.1(n) together with all other funds held in suspense by or on behalf of the Company from and after the date set forth in Schedule 3.1(n) with respect to the Subject Assets.

"Tax" or "Taxes" shall mean (i) any federal, state or local income, gross receipts, ad valorem, sales and use, goods and services, payroll, unemployment, employment, social security (or similar), disability, occupation, property (whether real or personal), severance, value added, transfer, registration, license, stamp, franchise, profits, capital, excise, withholding, premium, federal or provincial capital taxes, occupation, alternative, add-on minimum or other taxes, levies or other like assessments, customs, duties, imposts, charges, unclaimed property and escheat obligations, surcharges or fees imposed by or on behalf of any Governmental Authority, including any interest, penalty or addition attributable thereto, and (ii) any liability in respect of any items

described in (i) 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.

"Tax Controversy" shall be as defined in Section 7.9(g)(iv).

"Tax Return" shall mean any return, report, declaration, or similar statement or form required to be filed with a Taxing Authority with respect to any Tax (including any attached schedules and related or supporting information), including any information return, claim for refund, amended return or declaration of estimated Tax, and including any amendment thereof.

"Taxing Authority" means, with respect to any Tax, the Governmental Authority that imposes such Tax, and the agency (if any) charged with the collection of such Tax.

"Termination Effective Time" shall be as defined in Section 13.1(a)(ii).

"Title Arbitrator" shall be as defined in Section 5.5(b).

"Title Defect" shall be as defined in Section 5.3.

"Title Defect Adjustment" shall be as defined in Section 5.2(d).

"Title Defect Amount" shall be as defined in Section 5.2(d).

"Title Defect Deductible" shall be as defined in Section 5.7.

"Title Defect Property" shall be as defined in Section 5.2(c)(i).

"Transfer Requirement" shall mean any consent, approval, authorization or permit of, or filing with or notification to, any Person which is required to be obtained, made or complied with for or in connection with any sale, assignment or transfer of any Subject Asset or any interest therein other than those customarily obtained from or made or complied with any Governmental Authority following the closing in transactions of this nature.

"Transfer Tax" shall mean any and all transfer Taxes (excluding Income Taxes, Severance Taxes and Property Taxes), including sales, use, excise, goods and services, stock, conveyance, gross receipts, registration, business and occupation, securities transactions, real estate, land transfer, stamp, documentary, notarial, filing, recording, Permit, license, authorization and similar Taxes, fees, duties, levies, customs, tariffs, imposts, assessments, obligations and charges.

"Treasury Regulations" shall mean the regulations promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Code. All references herein to sections of the Treasury Regulations shall include any corresponding provision or provisions of succeeding, similar, substitute, proposed or final Treasury Regulations.

"Wells" shall be as defined in the definition of "Subject Assets" set forth in this Appendix A.

“Willful Breach” means a material breach that is a consequence of an intentional act or omission undertaken by the breaching Party with the actual knowledge that the taking of, or failure to take, such act would, or would be reasonably expected to, cause a material breach of such covenant or agreement.

"Working Interest" means with respect to any Property Subdivision, the interest in and to such Property Subdivision that is burdened with the obligation to bear and pay costs and expenses of maintenance, development and operations on or in connection with such Property Subdivision, but without regard to the effect of any royalties, overriding royalties, production payments, net profits interests and other similar burdens upon, measured by, or payable out of production therefrom.