Purchase and Sale Agreement executed September 20, 2011

the plugging, replugging and abandonment of all Wells, either active or inactive;

the removal, abandonment and disposal of structures, facilities, foundations, wellheads, tanks, pipelines, flowlines, pumps, compressors, separators, heater treaters, valves, fittings and equipment and machinery of any nature and all materials contained therein, located on or used in connection with the Properties;

the clearance, restoration and remediation of the lands, groundwater and waterbottoms covered or burdened by the Leases or otherwise affected by the Properties; and

the removal, remediation and abatement of any petroleum material, any contamination or pollution (including spilling, leaking, pumping, pouring, emitting, emptying, discharging, leaching, dumping, disposing or other release of any chemical substance, pollutant, contaminant, toxic substance, radioactive material, hazardous substance, NORM, waste, saltwater, cuttings, muds, crude oil, or petroleum product) of surface soils and water, subsurface soils, air, groundwater, or any vessel, piping, equipment, tubing or subsurface structure or strata associated with the Properties.

all of the Company’s rights, titles and interests in and to the oil, gas or mineral leases, leasehold estates, operating rights and other rights authorizing the owner thereof to explore or drill for and produce Hydrocarbons and other minerals, contractual rights to acquire any such of the foregoing interests, which have been earned by performance, and fee mineral, royalty and overriding royalty interests, net profits interests, production payments and other interests payable out of Hydrocarbon production, in each case, in which the Company has an interest (the “Leases”);

all of the Company’s rights, titles and interests in and to any wells situated on the land described in the Leases or on land pooled, communitized or unitized therewith, including the wells described in Exhibit “B” or related to the Leases/Fields listed on Exhibit “A” (the “Wells”), together with all of the Company’s interests in and to all of the (i) crude oil, condensate or products in storage and produced after the Effective Date or in pipelines and (ii) materials, supplies, machinery, equipment, personal property, fixtures, improvements and other property, whether real, personal or mixed, now or as of the Effective Date on, appurtenant to or used or obtained by the Company in connection with the Leases or the Wells or with the production, injection, treatment, sale or disposal of Hydrocarbons and all other substances produced therefrom or attributable thereto including all equipment, machinery, fixtures and other tangible personal property and improvements located on the Oil and Gas Properties or used or held for use primarily in connection with the operation of the Oil and Gas Properties, including any Wells, wellhead equipment, tanks, boilers, buildings, fixtures, injection facilities, saltwater disposal facilities, compression facilities, pumping units and engines, flowlines, pipelines, gathering systems, gas and oil treating facilities, machinery, power lines, telephone and telegraph lines, roads, and other appurtenances, improvements and facilities (collectively, the “Fixtures, Facilities and Equipment”);

all of the Company’s rights, titles and interests in royalty interests, overriding royalty interests, net profits interests, operating interests, reversionary interests and other interests or benefits or credits owned by the Company in and to the Leases and Wells or in any other land or leases or in or attributable to production therefrom, and all rights, properties and interests of the Company relating to such interests, including without limitation all oil, gas and other minerals relating to the Leases credited to the account of or owned by the Company and its Subsidiaries for the period prior to the Effective Date pursuant to any balancing agreements relating to the Leases or otherwise arising by virtue of the fact that the Company may not have taken or marketed their full share of oil, gas or other minerals attributable to the Leases;

all of the Company’s right, titles and interests in and to, or otherwise derived from (i) all operating agreements and exploration agreements related to the properties described in subsections (a) through (c) above; (ii) pooling, communitization, and unitization agreements, declarations, designations and and/or orders and in and to the properties covered and the units created thereby (including without limitation, all units formed under orders, rules, regulations, or other official acts of any federal, state or other authority having jurisdiction, and voluntary unitization agreements, designations and/or declarations) relating to the properties described in subsections (a) through (c) above; and (iii) farmout agreements, joint venture agreements, product purchase and sale contracts, transportation, processing, treatment or gathering agreements, leases, permits, rights-of-way, easements, rights of surface use, licenses, options, declarations, orders, contracts, agreements, instruments in any way relating to the properties described in subsections (a) through (c) above and other rights and interests used in connection with the exploration, development, operation or maintenance of the properties described in subsections (a) through (c) above (the “Oil and Gas Agreements”); and

the Records.

The Sellers also acknowledge and understand that:

the Shares are restricted securities within the meaning of “Rule 144” promulgated under the Securities Act;

the exemption from registration under Rule 144 will not be available in any event for at least six months from the date of issuance of the Shares to the Sellers, and even then will not be available unless (i) a public trading market then exists for the common stock of the Buyer, (ii) adequate information concerning the Buyer is then available to the public and (iii) other terms and conditions of Rule 144 are complied with; and

any sale of the Shares may be made by the Sellers only in limited amounts in accordance with such terms and conditions.

To the Knowledge of Seller Parties, the Company is in compliance in all material respects with all applicable Laws. The Company has not received any notice from any Governmental Body, or any other Person, alleging that the Company is in violation of, or has violated, any applicable Law in any material respect and to the Knowledge of the Seller Parties, no such allegation has been filed, commenced or threatened against the Company.

Notwithstanding the foregoing, this Section 3.12 does not relate to Environmental Laws, Environmental Liabilities, Environmental Permits or matters that would or could constitute Environmental Breaches, which are addressed solely in Section 7.1.

To the Knowledge of Seller Parties: (i) the Company has timely filed (taking into account any properly granted extensions of time to file) all Tax Returns with the appropriate taxing authorities required to have been filed, and each such Tax Return is correct and complete in all material respects; (ii) all material Taxes due and owed by the Company, whether or not shown on any Tax Return, have been timely paid; (iii) the Company and its officers, directors or employees responsible for Tax matters have complied with all rules and regulations relating to the withholding of Taxes and the remittance of withheld Taxes in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party; (iv) the Company has not waived any statute of limitations in respect of its Taxes or agreed to any extension of time with respect to a Tax assessment of deficiency, which waiver or extension is currently in effect; (v) there are no liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of the Company; (vi) the Company has not received any written notice from any Tax authority that such Tax authority currently plans to assess any additional Taxes for any period for which Tax Returns have been filed; (vii) no tax audits or administrative or judicial Tax proceedings are pending or being conducted with respect to the Company; (viii) the Company has not received from any taxing authority (including jurisdictions in which the Company has not filed Tax Returns) any currently unresolved (A) written notice indicating an intent to open an audit or other review, (B) written or oral request for information related to Tax matters or (C) notice of deficiency or proposed adjustment for any amount of Tax, proposed, asserted or assessed by any taxing authority against the Company; and (ix) the Company has never been treated as an S-corporation as defined in Section 1361 under the Code.

The Company has delivered to Buyer (i) complete copies of all Tax Returns of the Company requested by Buyer, and of all examination reports and statements of deficiencies assessed against or agreed to by the Company for all taxable periods for which the applicable statute of limitations has not yet expired, and (ii) complete copies of all private letter rulings, revenue agent reports, information documents requests, notices of proposed deficiencies, deficiency notices, protests, petitions, closing agreements, settlement agreements, pending ruling requests, and any similar documents, submitted by, received by, agreed to by or on behalf of or otherwise relating to the Company with respect to a taxable period for which the statute of limitations has not yet expired.

The Company does not own any interest or has not owned an interest in any Person treated as a partnership for Tax purposes.

Schedule 3.15 lists all material Contracts to which the Company is a party or by which it or its assets or Properties may be bound.

To the Knowledge of Seller Parties, each material Contract is a valid and binding, in full force and effect and enforceable against the Company and, to the Knowledge of Seller Parties, the other parties thereto in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors’ rights generally and the application of general principles of equity (regardless of whether that enforceability is considered in a proceeding at law or in equity). To the Knowledge of Seller Parties: i) neither the Company nor any other party thereto is in default thereunder and ii) no condition exists with respect to any such Contract, which, with the passage of time or the giving of notice or both, could reasonably be expected to have a Material Adverse Effect. Neither the Company nor Sellers have received notice of any claim of breach or default under any Contract, except for such breaches or defaults which would not, individually or in the aggregate, have a Material Adverse Effect. The consummation of the transactions contemplated by this Agreement would not give any party to any Contract the right to terminate or alter the terms of such Contract or to declare a breach or default thereunder except for such terminations or alterations which would not, individually or in the aggregate, have a Material Adverse Effect. Each Contract in the possession of Company or Sellers has been provided to Buyer. The right, title and interest of Company in each Contract is free and clear of all Liens (other than Liens specified in such Contract). Except as disclosed in Schedule 3.15, (i) no material Contract will be terminated by the Company or Sellers prior to Closing and (ii) neither the Company, Sellers nor any other party to any Contract, have given or, to the Knowledge of the Seller Parties, threatened to give notice of any action to terminate, cancel, rescind or procure a judicial reformation of any material Contract or any provisions thereof.

Sellers and the Company specially warrant by, through or under Sellers or the Company, but not otherwise that:

the Oil and Gas Properties are free and clear of all Liens; and

with respect to each of the Wells set forth on Exhibit “B” the ownership by the Company entitles the Company to receive a decimal share of the oil, gas and other hydrocarbons produced from such Well not less than the decimal share set forth in Exhibit “A” as the “Net Revenue Interest” for such Well and causes the Company to be obligated to bear a decimal share of the cost of operation of such Well not greater than the decimal share set forth in Exhibit “A” as the “Working Interest” for such Well, and such shares of production which the Company is entitled to receive, and shares of expenses which the Company is obligated to bear, are not subject to change (unless the Net Revenue Interest for such asset is greater than the Net Revenue Interest set forth on Exhibit “A” in the same proportion as any increase in such Working Interest).

Except as set forth in Schedule 3.24, the Company has not entered into any commitment to incur any individual capital expenditure in excess of $100,000 or any two or more commitments which in the aggregate exceed $250,000 in connection with the ownership or operation of the Oil and Gas Properties, other than routine expenses incurred in the normal and ordinary operation of the Oil and Gas Properties in accordance with generally accepted practices in the oil and gas industry. Further, the Company has not abandoned, or, agreed to abandon, any Wells (or removed any material items of equipment, except those replaced by items of substantially equivalent suitability and value) on the Oil and Gas Properties since the Effective Date.

All expenses (including all bills for labor, materials and supplies used or furnished for use by the Company in connection with the Oil and Gas Properties, and all severance, production, ad valorem, windfall profit and other similar Taxes) relating to the ownership or operation of the Oil and Gas Properties by the Company, have been, and are being paid (timely, and before the same become delinquent) by the Company, except such expenses and Taxes as are disputed in good faith by the Company and except for such expense or Tax, the non-payment of which, either individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect. With respect to the Oil and Gas Properties operated by the Company, the Company is not delinquent in any material respect, and with respect to the Oil and Gas Properties operated by third parties, to the Knowledge of the Seller Parties, such third party is not delinquent in any material respect, with respect to its obligations to bear costs and expenses relating to the development and operation of such Oil and Gas Properties. The Company is not delinquent with respect to its obligations to pay any material royalties, overriding royalties, compensatory royalties and other payments due from or in respect of production, with respect to the Oil and Gas Properties it operates.

All proceeds from the sale of Hydrocarbons produced from the Oil and Gas Properties are being received by the Company in a timely manner.

No Person has any call upon, option to purchase, preferential right to purchase or similar rights with respect to the Oil and Gas Properties or to the production therefrom.

Other than the Oil and Gas Properties, Schedule 3.17(a) sets forth the legal description of each parcel of Owned Real Property. With respect to each parcel of Owned Real Property, and except as specified in Schedule 3.17(a):

the Company has good and marketable title, free and clear of all Liens;

the Company has not leased or otherwise granted to any Person the right to use or occupy such Owned Real Property or any portion thereof;

there are no outstanding options, rights of first offer or rights of first refusal to purchase such Owned Real Property or any portion thereof or interest therein;

other than the Company, there are no parties in possession of the parcel of Owned Real Property; and

all facilities located on the parcels of Owned Real Property are supplied with utilities and other services necessary for the operation of such facilities, including electricity and water all of which services are adequate and are provided via public roads or via appurtenant easements benefiting the parcels of Owned Real Property.

Other than the Oil and Gas Properties, Schedule 3.17(b) sets forth the address of each parcel of Leased Real Property which is material to the business of the Company (“Real Property Leases”), and a true and complete list of all Real Property Leases for each such parcel of Leased Real Property. The Company has made available to Buyer a true and complete copy of each Real Property Lease. With respect to each of the Real Property Leases:

each such Real Property Lease is legal, valid, binding, enforceable, and in full force and effect;

each such Real Property Lease will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated by this Agreement;

the Company has not received notice of, and to the Knowledge of Seller Parties is not in, breach or default under such Real Property Lease, and to the Knowledge of Seller Parties no event has occurred which, with notice or lapse of time, would constitute a breach or default or permit termination, modification, or acceleration thereunder;

no other party to such Real Property Lease has repudiated or breached any provision thereof;

all facilities leased or subleased under such Real Property Lease have received all approvals of Governmental Bodies (including Permits) required in connection with the operation thereof and, to the extent operated by Company, have been operated and maintained in accordance with applicable Laws; and

except as set forth on Schedule 3.17(b), all facilities leased or subleased under such Real Property Lease are supplied with utilities and other services necessary for the operation of such facilities, including electricity and water all of which services are adequate and are provided via public roads or via appurtenant easements benefiting the parcel of Leased Real Property.

The Company or the operators of the Oil and Gas Properties, hold all Permits required under applicable Law and necessary to carry on operations connected with the Oil and Gas Properties as currently conducted, except where the failure to obtain such permits or licenses would not have a Material Adverse Effect.

The Company or such operator is in compliance with the terms, provisions and conditions of each of its Permits, except where the failure to be in compliance would not have a Material Adverse Effect.

Sellers have made available to Buyer in the offices of the Company true and complete copies of (i) all material Permits of the Company and (ii) any and all pending applications of additional material Permits that have been submitted to any Governmental Body by or on behalf of the Company.

Buyer has been provided copies or access to balance sheets and statements of operations, income and cash flows of the Company for the period ended August 31, 2011 (the “Financial Statements”), which are attached hereto as Exhibit “D”. Such financial statements and notes fairly present the financial condition and the results of operations and changes in cash flow at the respective dates of and for the periods referred to in such financial statements.

Any accounts receivable as of August 31, 2011 will be retained by the Sellers.

Except as set forth in this Agreement or on the Financial Statements and any related footnotes thereto, the Company has no liabilities or obligations, including off balance sheet arrangements of any nature (whether accrued, absolute, fixed, contingent or otherwise and whether due or become due) except for (a) liabilities and obligations incurred since the date of the Financial Statements in the Ordinary Course of Business or operations, (b) liabilities and obligations incurred since the date of the Financial Statements pursuant to this Agreement, (c) liabilities and obligations disclosed in this Agreement (or its schedules) or (d) liabilities or obligations that would not reasonably be expected to have a Material Adverse Effect.

borrowed any amount or incurred or become subject to any liabilities (other than liabilities specifically indicated in the balance sheet of the Financial Statements attached as Exhibit “D”);

mortgaged, pledged or subjected to any Lien, charge or other encumbrance, any material portion of its assets;

sold, assigned or transferred any portion of its tangible assets outside the ordinary course of business;

issued, sold or transferred any of its capital stock or other equity securities, securities convertible into its capital stock or other equity securities or warrants, options or other rights to acquire its capital stock or other equity securities, or any bonds or debt securities;

made any loan to any other Person;

Other than as specified in Sections 3.16(b) or 3.24 made any capital expenditures or commitments therefor in excess of $100,000 individually or in excess of $250,000 in the aggregate;

made any loan to, or entered into any other transaction with, any of its directors, officers, and employees outside the ordinary course of business;

amended its Organizational Documents;

made any material change in any method of accounting or accounting principles or practice or made any change in revenue recognition practice;

terminated or otherwise amended any material Contracts other than in the Ordinary Course of Business;

incurred any loss, destruction or casualty affecting the Company not covered by insurance;

(A) made or revoked any election relating to Taxes, (B) settled or compromised any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, (C) filed any amended Tax Return, or (D) changed any methods of reporting income or deductions for federal income tax purposes; or

committed or agreed in writing, orally or otherwise to do any of the foregoing.

All royalties and other payments due as of the Effective Date under the Leases have been or will be properly and timely paid in accordance with applicable Lease provisions and federal, state or tribal regulations, and all conditions within the control of the Company necessary to keep the Leases in force have been fully performed.

The material Oil and Gas Agreements are in full force and effect and constitute binding obligations of the parties thereto. (i) the Company is not in breach or default (and no situation exists that with the passage of time or giving of notice would create such a breach or default) of its obligations under the material Oil and Gas Agreements and (ii) no breach or default by any third party (or situation that with the passage or time or giving of notice would create such a breach or default) exists.

Except as specifically stated in this Agreement, SELLER PARTIES MAKE NO REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO ANY MATTER OR THING AND DISCLAIM ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, COLLATERAL CONTRACT, STATEMENT, ASSURANCE, OPINION OR INFORMATION MADE OR COMMUNICATED (ORALLY OR IN WRITING) TO BUYER (INCLUDING THOSE BY ANY OFFICER, DIRECTOR, EMPLOYEE, AGENT, ADVISER, CONSULTANT OR REPRESENTATIVE OF SELLERS, COMPANY OR ANY AFFILIATE THEREOF).

The Parties agree that, to the extent required by applicable Law to be effective, the disclaimers of certain representations and warranties contained in this Section 3.30 are “conspicuous” disclaimers for the purpose of any applicable Laws.

maintain its assets in a manner consistent with and in compliance with applicable law; and

not enter into any material transaction or assume or incur any material liability outside the normal course of its business.

declare or pay any dividend, or make any distribution of its properties or assets to its shareholders, or purchase or retire any of its shares;

sell all or any part of its assets or agree to do or perform any act or enter into any transaction or negotiation which could reasonably be expected to interfere with this Agreement or which would render inaccurate any of the representations, warranties and covenants set forth in this Agreement; or

merge, amalgamate or consolidate into or with any entity, or enter into any other corporate reorganization;

Buyer acknowledges and agrees that at Closing, it shall accept all Properties in its then “AS IS, WHERE IS” condition and with all faults, with an expressed acceptance and understanding of the disclaimers contained in this Agreement.

Buyer further acknowledges each of the following:

that the Oil and Gas Properties and the Facilities, Fixtures and Equipment have been used for oil and gas exploration, drilling and producing operations, pipeline, transportation or gathering operations, and other related oilfield operations, including, possibly the injection, storage or disposal of produced water or waste materials incidental to or occurring in connection with such operations;

that physical changes in the land, groundwater or subsurface may have occurred as a result of any such uses and that Buyer has entered into this Agreement on the basis of Buyer's own investigation of, or right to investigate, the physical condition of the Properties, including the Oil and Gas Properties and the surface and subsurface conditions;

that Buyer assumes the risk that adverse physical conditions, including the presence of unknown, abandoned or unproductive oil wells, gas wells, equipment, pits, landfills, flowlines, pipelines, water wells, injection wells and sumps, which may or may not have been revealed by Buyer's investigation, are located thereon or therein, and whether discovered, discoverable, hidden, known or unknown to Buyer as of Closing;

Buyer acknowledges the disclaimers set forth in this Section 4.22, and acknowledges and affirms that it has not relied upon any representation, warranty, statement, opinion or information of Seller Parties except as specifically stated in this Agreement in entering into or carrying out the transactions contemplated by this Agreement; and

Buyer acknowledges that it has had access to the Properties, the officers and certain representatives of the Company, and the books, records, and files of the Company relating to the Properties, and Buyer has made, will make, or has arranged for others to make, or has been afforded the opportunity to make, an inspection and inventory of the Properties and, if not performed, waives such right at and with Closing.

The Parties agree that, to the extent required by applicable Law to be effective, the disclaimers of certain representations and warranties contained in this Section 4.22 are “conspicuous” disclaimers for the purpose of any applicable Laws.

As used in this Section 6.1:

“Defensible Title” means, as of the date of this Agreement and the Closing Date, with respect to the Oil and Gas Properties, such record title and ownership by the Company that:

entitles the Company to receive and retain, without reduction, suspension or termination, not less than the percentage set forth in Exhibit “A” as the Company’s Net Revenue Interest, of all Hydrocarbons produced, saved and marketed from each Lease comprising such Oil and Gas Property as set forth in Exhibit “A”, through plugging, abandonment and salvage of all wells comprising or included in such Oil and Gas Property, and except for changes or adjustments that result from the actions of Buyer or Company after Closing, the establishment of units, changes in existing units (or the participating areas therein), the operation of the provisions of any operating agreement covering the Oil and Gas Properties or the entry into pooling or unitization agreements after the date hereof unless made in breach of the provisions of Section 8.2;

obligates the Company to bear not greater than the percentage set forth in Exhibit “A” as the Company’s Working Interest of the costs and expenses relating to the maintenance, development, operation and production of Hydrocarbons from each Lease comprising or included in such Oil and Gas Property, through plugging, abandonment and salvage of all Wells comprising or included in the Oil and Gas Property, and except for changes or adjustments that result from the actions of Buyer or Company after Closing, the establishment of units, changes in existing units (or the participating areas therein), the operation of the provisions of any operating agreement covering the Oil and Gas Properties, or the entry into pooling or unitization agreements after the date hereof unless made in breach of the provisions of Section 8.2;

is free and clear of all Liens and defects that would create a material impairment of use and enjoyment or a material loss of interest in the affected Oil and Gas Properties; and

reflects that all consents to assignment and notices of assignment or preferential purchase rights that are applicable to or must be complied with in connection with the transactions contemplated by this Agreement, have been obtained and complied with to the extent the failure to obtain or comply with the same could render this transaction (or any right or interest affected thereby) void or voidable or could result in Buyer or the Company incurring any material liability.

“Title Defect” means any particular defect in or failure of, or a series of related defects in or failures of, the ownership of any Oil and Gas Property by the Company: (A) that causes the Company to not have Defensible Title to such Oil and Gas Property and (B) that has attributable thereto a Title Defect Amount of $100,000 or more, measured without taking into account materiality or similar standards. Notwithstanding any other provision in this Agreement to the contrary, the following matters shall not constitute, and shall not be asserted as, a Title Defect: (1) defects or irregularities arising out of lack of corporate authorization or variation in corporate or entity name; (2) defects or irregularities that have been cured or remedied by the applicable statutes of limitation or statutes for prescription; (3) defects or irregularities in the chain of title consisting of the failure to recite marital status in documents or omissions of heirship proceedings; (4) minor defects or irregularities in title outstanding from and after the date that Sellers took possession of the Properties which have not delayed or prevented the Company, as applicable, from receiving its Net Revenue Interest share of the proceeds of production and have not caused the Company to bear a share of expenses and costs greater than its Working Interest share from each Lease, unit or Well; (5) gas imbalances (e.g., a situation where the Company or its predecessor in title to an Oil and Gas Property has taken more or less gas from a well than their ownership of the Oil and Gas Properties would entitle it to receive); (6) defects or irregularities in title made the subject of requirements in title opinions which were waived by the operator consistent with normal oil and gas industry practice (e.g., surveys, Taxes, prior unreleased leases or units, or unreleased Liens on non-drill site or non-wellbore tracts or for which no notice of default has been received); (7) defects or irregularities resulting from or related to probate proceedings or the lack thereof which defects or irregularities have been outstanding from and after the date that Sellers took possession of the Properties; and (8) defects or irregularities, litigation, or other matters or circumstances, disclosed in Schedule 6.1(a)(iii).

Notice of Title Defects. Buyer shall give Sellers written notice of any Oil and Gas Property that Buyer alleges in good faith to have a Title Defect (a “Title Defect Notice”) no later than September 30, 2011, at 5:00 p.m., Central Daylight Time (the “Title Defect Notice Date”). Such notice shall be in writing and shall include the following information: (i) a description of the Title Defect, (ii) the reasonable basis for the Title Defect, (iii) the Allocated Value of the affected Oil and Gas Property, and (iv) the Title Defect Amount and the computations upon which Buyer’s belief is based. Upon the written request of Sellers, Buyer shall promptly make available or deliver to Sellers (by electronic mail or otherwise) any reasonable documentation supporting the basis for any Title Defect set forth in a Title Defect Notice. In determining which portions of an Oil and Gas Property has a Title Defect, it is the intent of the parties to include, to the extent possible, only that portion of the affected Oil and Gas Property (whether a Well, unit or leasehold interest, as applicable) materially and adversely affected by the defect or basis for such Oil and Gas Property being treated as having a Title Defect. Subject only to the special warranty of title set forth in the conveyances and the limited title warranty set forth in Section 3.16(a), any matters that may otherwise constitute Title Defects, but of which Sellers have not been specifically notified by Buyer in accordance with the foregoing by the Title Defect Notice Date, shall be deemed to be waived by Buyer for all purposes. Upon the receipt of an effective Title Defect Notice from Buyer, Sellers shall have the option, but not the obligation, to attempt to cure such Title Defect at Sellers’ sole cost and expense at any time prior to Closing. The Oil and Gas Property affected by any uncured Title Defect at Closing shall be a “Title Defect Property”.

Title Defect Amount. The amount by which the Allocated Value of an affected Title Defect Property has been reduced by a Title Defect (the “Title Defect Amount”) shall be determined as follows:

the Title Defect Amount with respect to a Title Defect Property shall be determined by taking into consideration the Allocated Value of the Title Defect Property, the portion of such Title Defect Property subject to such Title Defect, and the legal effect of such Title Defect on the Property; provided, however, that: (A) if such Title Defect is in the nature of the Company’s Net Revenue Interest in an Oil and Gas Property being less than the Net Revenue Interest set forth in Exhibit “A” and there is not a proportionate reduction in the Working Interest set forth for such Oil and Gas Property in Exhibit “A”, then the Title Defect Amount shall be equal to the Allocated Value for such Oil and Gas Property multiplied by a fraction, the numerator of which is the reduction in such Net Revenue Interest as a result of such Title Defect and the denominator of which is the Net Revenue Interest specified for such Title Defect Property in Exhibit “A” or (B) if such Title Defect is in the nature of a Lien, then the Title Defect Amount shall equal the amount required to fully discharge such Lien; and

If the Title Defect results from any matter not described in Section 6.1(c)(i), the Title Defect Amount shall be an amount equal to the difference between the value of the Title Defect Property with such Title Defect and the value of such Title Defect Property without such Title Defect (taking into account the portion of the Allocated Value of the Title Defect Property).

Each of the Sellers and the Company hereby represents and warrants to Buyer that, except as disclosed in Schedule 7.1:

the Seller Parties have made available to Buyer copies of all environmental reports, assessments, studies and compliance audits, and all other documents and correspondence addressing any actual, potential or alleged violation of Environmental Laws or Environmental Liabilities that relate to the Properties that are in the possession or control of any of the Seller Parties or any of their respective Affiliates;

Seller Parties have not received any notice of any pending and to the Knowledge of the Seller Parties, there are no threatened claims, demands, actions, notices of noncompliance, administrative proceedings, lawsuits, or investigations or outstanding orders, judgments, or decrees against the Company or relating to the Properties under any Environmental Laws, or claiming any personal injury, property damage, or other harm allegedly resulting from the release of or exposure to any Hazardous Material, or otherwise arising from any violations of Environmental Laws or concerning any Environmental Liabilities, which, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect;

none of the Seller Parties and/or their respective Affiliates has received any notice or request for information indicating that it is a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq., or any similar Law with respect to any Property or any location where substances may have been disposed from any of the Properties, or any notice of any Governmental Body’s allegation or investigation of any violation of Environmental Law;

to the Knowledge of the Seller Parties: (A) the Company holds all material Permits under Environmental Laws needed to operate the Properties as they are being operated as of the date of this Agreement (the “Environmental Permits”); (B) all such Environmental Permits are in effect; (C) no appeal or any other action is pending to revoke any such Environmental Permit, and (D) the Company has received no notice that it is not in compliance with all terms and conditions of all such Environmental Permits, except where such ineffectiveness, appeal, action to revoke, or noncompliance would not reasonably be expected to result in a Material Adverse Effect;

the Company has not entered into any agreement that may require it to pay to, reimburse, guarantee, pledge, defend, indemnify or hold harmless any Person from or against any Environmental Liabilities, excluding any such agreement as to which the time period for making any claim against the Company has expired;

to the Knowledge of Seller Parties, none of the Oil and Gas Properties operated by the Company have, or based on their operations, are required to have, a permit to operate a treatment, storage or disposal facility pursuant to the federal Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., or Laws that regulate the treatment, storage or disposal of hazardous waste; and

to the Knowledge of Seller Parties, none of the Properties have Hazardous Materials present or have had a Release of Hazardous Materials that could give rise to Environmental Liabilities.

if an Environmental Breach is discovered by Buyer, an Environmental Notice must be received by Sellers as soon as reasonably practical after discovery of the Environmental Breach, but in any event no later than the Environmental Breach Notice Date;

the Environmental Notice must be based on credible scientific or probative evidence substantiated in good faith by Buyer that establishes that an Environmental Breach exists;

the evidence referred to in Section 7.2(b) must be fully described and substantiated in good faith by Buyer. If the alleged Environmental Breach relates to the presence of Hazardous Materials, then such evidence must include sampling results sufficient to demonstrate the presence of such Hazardous Materials. Complete copies of all reports, tests, photographs, and other evidence supporting the position that an Environmental Breach has occurred must also be enclosed;

the Environmental Notice must reasonably describe the action, remediation and/or restoration required to remedy the Environmental Breach, or the damages claimed and likely to be recovered by a third party, each as recommended or estimated in good faith by Buyer;

the Environmental Notice must state Buyer’s good faith estimate of the amount attributable to the Environmental Breach, which estimate shall be reasonably based on the credible scientific or probative evidence included in the Environmental Notice under Section 7.2(b) (the “Environmental Defect Value”);

such alleged Environmental Breach is such that:

prosecution, if instituted, would be reasonably likely to result in a penalty, fine or damage payment on the part of Sellers of $100,000 or more; and

performance of corrective work in respect of such alleged Environmental Breach required by Environmental Laws would be reasonably likely to result in expenditures of $100,000 or more, net to Sellers’ interest in the affected Property; and

notwithstanding anything to the contrary in this Article VII, no Decommissioning Obligation shall be considered an Environmental Breach.

Remedy. Subject to the provisions of Section 7.3(b) and 7.3(c) and the provisions of Section 7.4, if Buyer delivers a valid Environmental Notice to Sellers, Sellers, at its election, shall have the option of (i) remediating the Environmental Breach to the satisfaction of the appropriate state and federal agencies having jurisdiction; or (ii) reducing the Purchase Price by an amount equal to the Environmental Defect Value attributable to such Environmental Breach; or (iii) agreeing to indemnify Buyer.

Remediation. In the event Sellers elect the remedy set forth in Section 7.3(a)(i), (i) Sellers shall commence the remediation or cure of such Environmental Breach as soon as reasonably practicable and continue diligently thereafter until completion of the cure or remediation of such Environmental Breach and (ii) to the extent Sellers have failed to cure or remediate each Environmental Breach that it elected to cure or remediate under this Agreement by Closing, Sellers and Buyer shall enter into an access agreement at Closing allowing Sellers access to the Properties affected by each such Environmental Breach and containing such other terms and conditions as may be mutually agreed upon by Sellers and Buyer. In the event Sellers fail to deliver its election notice to Buyer prior to Closing, then Sellers shall be deemed to have elected the remedy set forth in Section 7.3(a)(ii).

Indemnification. In the event Sellers elect the remedy set forth in Section 7.3(a)(iii), Buyer shall accept the Properties subject to such alleged Environmental Breach and the Closing shall take place without any adjustment of the Purchase Price. Sellers shall indemnify and defend Buyer and the Buyer Indemnified Parties against all claims, demands and liabilities incurred by Buyer with respect to such alleged Environmental Breach, up to, but in no event to exceed, the sum of $800,000 (such amount being cumulative for any and all claims of alleged Environmental Breach made by Buyer). Sellers’ obligation to pay up to the aforementioned sum applies only after such Losses exceed $300,000, which $300,000 amount shall be borne and paid by Buyer. In the event of a claim of an alleged Environmental Breach and a demand for indemnification by Buyer hereunder, Sellers reserve the right to jointly negotiate with Buyer and the agency or party, if any, making such claim the right of access to the affected site, the use of temporary storage and resources at such site, to the full extent held by Buyer, and the right to perform assessment, removal and remedial operations for such alleged Environmental Breach, at its cost and risk.

for each valid Environmental Notice, Sellers’ obligations under Section 7.3 shall only arise if the amount of the Environmental Defect Value attributable to an Environmental Breach exceeds $100,000 per “Incident” or condition (the “Environmental Incident Deductible”). Any Release of the same substance that occurs or reoccurs in the same general area on account of a singular cause or course of conduct shall be considered as a single Incident;

if the alleged Environmental Breach relates to the presence of Hazardous Materials on, at or under the Oil and Gas Properties, for each valid Environmental Notice, Sellers’ obligations shall arise only if corrective actions to remedy the Environmental Breach are required by an Environmental Law or by a Governmental Body, and Sellers’ obligations shall be limited to the minimal amount required under the applicable Environmental Law or by the Governmental Body to remedy the Environmental Breach; and

with respect to any Environmental Breach, Sellers’ obligations under this Article VII shall apply only to the extent that the amount of the Environmental Defect Value exceeds the Environmental Incident Deductible.

the Company shall, and Sellers shall cause the Company to, carry on its business and conduct its operations in the Ordinary Course of Business and use its reasonable efforts to maintain, preserve, and protect the assets and goodwill of Company in accordance with past practices. The Parties acknowledge that any revenues earned or expenses incurred with respect to the working interests in the Properties prior to the Effective Date will be the property and responsibility of the Sellers;

the Company shall not, and Seller Parties shall cause the Company to not:

amend the Organizational Documents of the Company;

adopt or propose any change to the Company’s structure or organization, including any splits, combinations, or reclassifications of any Interests or any other securities or equity equivalents in the Company;

declare, set aside or pay any dividend or other distribution in respect of any Interests or any other securities or equity equivalents in the Company;

repurchase, redeem or otherwise acquire any Interests or any other securities or equity equivalents in the Company or adopt a plan of complete or partial liquidation or resolutions providing for or authorizing a liquidation, dissolution, merger, consolidation, restructuring, recapitalization, or other reorganization of the Company;

acquire (by merger, consolidation, or acquisition of stock or assets or otherwise) any other Person;

acquire, sell, license, lease, transfer, abandon or otherwise dispose of, directly or indirectly, any assets or Properties, except for (A) acquisitions, sales, leases, transfers, abandonments or dispositions of assets or Properties not exceeding individually or $250,000 in the aggregate; (B) sales of Hydrocarbons or entering into oil and gas leases in the Ordinary Course of Business; or (C) sales of inventory and excess or obsolete assets in the Ordinary Course of Business or personal property in the Ordinary Course of Business that is either replaced by equivalent property or normally consumed in the operation of the business of the Company;

amend any Tax Return or settle or compromise any material federal, state, local, or foreign Tax liability or enter into any agreement or preliminary settlement with any Governmental Body concerning material Taxes; make or revoke any Tax election except elections consistent with past practices and which are required to be made in connection with Tax Returns filed for any tax period ending prior to the Closing Date; file with, or provide to, any Governmental Body any waiver extending the statutory period for assessment or reassessment of Taxes or any other waiver of restrictions on assessment or collection of any Taxes;

issue sell, or deliver or commit to issue, sell or deliver (in each case, whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase, or otherwise) any additional Interests or any other securities or equity equivalents in the Company, or amend in any respect any of the terms of any Interests or other security of the Company outstanding as of the date of this Agreement;

create, incur, guarantee, or assume any Indebtedness or otherwise become liable or responsible for the obligations of any other Person;

make any loans, advances, or capital contributions to, or investments in, any other Person, including any officer, director, employee or owner of Interests;

pledge or otherwise encumber the Interests or other equity securities of the Company; or mortgage or pledge any Company assets, tangible or intangible, or create or suffer to exist any Lien thereupon (except for customary Liens contained in or arising under joint operating (or similar) agreements binding on the Company with respect to amounts not yet due or not yet delinquent and except for statutory Liens for amounts not yet due or not yet delinquent);

(A) enter into, adopt, or amend or terminate any bonus, profit sharing, compensation, severance, termination, stock option, stock appreciation right, restricted stock, performance unit, stock equivalent, stock purchase, pension, retirement, deferred compensation, incentive compensation, employment, or other employee benefit agreement, trust, plan, fund, or other arrangement for the benefit or welfare of any director, officer, or employee, including any company benefit plan; (B) increase in any manner the compensation or fringe benefits of any director, officer, or employee, other than increases in the Ordinary Course of Business; (C) pay to any director, officer, or employee any benefit not required by any company benefit plan or employee benefit agreement, trust, plan, fund, or other arrangement as in effect on the date hereof; or (D) fail to make any required contribution to any company benefit plan;

(A) waive or release any material claim or right of value or cancel any debt or claim held by it or (B) enter into any settlement in an amount greater than $50,000;

pay, discharge or satisfy any material claims, liabilities, obligations or Indebtedness (whether accrued, absolute, contingent, unliquidated or otherwise, and whether asserted or unasserted), other than payment, discharge or satisfaction in the Ordinary Course of Business;

change any of the financial or Tax accounting principles or practices used by it;

(A) make or agree to make any capital expenditure, or (B) incur or agree to incur any liability (absolute or contingent) or obligation under any contract or commitment requiring performance or payment by the Company involving amounts, in each case, which individually is in excess of $50,000 or in the aggregate is in excess of $100,000;

enter into any Contract that would be required to be disclosed in Schedule 3.15, or any Hedges, or amend, modify or change in any material respect, or waive any material right under, any existing Contract; or

authorize or propose, or agree in writing or otherwise to take, any of the actions described in this Section 8.2.

Buyer agrees that all Sellers Confidential Information shall be kept confidential by Buyer prior to the Closing as required by this Section 8.5(a); provided, however, that (i) any of such Sellers Confidential Information may be disclosed to such directors, officers, employees, investors, lenders and authorized representatives (including attorneys, accountants, consultants, bankers and financial advisors) of Buyer (collectively, for purposes of this Section 8.5(a), “Buyer Representatives”) as necessary for the purpose of evaluating the transactions contemplated herein (it being understood that such Buyer Representatives shall be informed by Buyer of the confidential nature of such information and shall be required to treat such information confidentially), (ii) any disclosure of Sellers Confidential Information may be made to the extent to which Sellers consents in writing, and (iii) Sellers Confidential Information may be disclosed by Buyer or any Buyer Representative to the extent that, in the opinion of counsel for Buyer or such Buyer Representative, Buyer or such Buyer Representative is legally compelled to do so, provided that, prior to making such disclosure, Buyer or such Buyer Representative, as the case may be, advises and consults with Sellers regarding such disclosure and provided, further, that Buyer or such Buyer Representative, as the case may be, discloses only that portion of the Sellers Confidential Information as is legally required. Buyer agrees that none of the Sellers Confidential Information will be used for any purpose other than in connection with the transactions contemplated herein. The term “Sellers Confidential Information,” as used herein, means all information obtained by or on behalf of Buyer from the Company pursuant to Section 5.1 or Section 5.2 and all similar information obtained from Sellers or the Company by or on behalf of Buyer prior to the date of this Agreement, other than information that (i) was or becomes generally available to the public other than as a result of disclosure by Buyer or any Buyer Representative, (ii) was or becomes available to Buyer on a non-confidential basis prior to disclosure to Buyer by Sellers or the Company or their respective representatives, or (iii) was or becomes available to Buyer from a source other than Sellers or the Company and their respective representatives, provided that such source is not known by Buyer to be bound by a confidentiality agreement with Sellers or the Company. If this Agreement is terminated, Buyer shall promptly return or destroy, and shall use its reasonable best efforts to cause all Buyer Representatives to promptly return or destroy, all Sellers Confidential Information to Sellers or the Company without retaining any copies thereof.

Sellers agree that all Buyer Confidential Information shall be kept confidential by Sellers after the Closing as required by this Section 8.5(b); provided, however, that (i) any disclosure of Buyer Confidential Information may be made to the extent to which Buyer consents in writing and (ii) Buyer Confidential Information may be disclosed by Sellers or any of its directors, officers, employees, investors, lenders and authorized representatives (including attorneys, accountants, consultants, bankers and financial advisors) (collectively, for purposes of this Section 8.5(b) , “Sellers Representatives”) to the extent that, in the opinion of counsel for Sellers or such Sellers Representative, Sellers or such Sellers Representative is legally compelled to do so, provided that, prior to making such disclosure, Sellers or such Sellers Representative, as the case may be, advises and consults with the Buyer regarding such disclosure and provided, further, that Sellers or such Sellers Representative, as the case may be, discloses only that portion of the Buyer Confidential Information as is legally required. The term “Buyer Confidential Information,” as used herein, means all information regarding the Company or obtained from Buyer or the Company, including while the Company was owned by, or a borrower from, Sellers, other than information that (i) was or becomes generally available to the public other than as a result of disclosure by Sellers or any Sellers Representative, (ii) was or becomes available to Sellers on a non-confidential basis prior to disclosure to Sellers by Buyer, the Company, or their respective representatives, or (iii) was or becomes available to Sellers from a source other than Buyer, the Company, and their respective representatives, provided that such source is not known by Sellers to be bound by a confidentiality agreement with Buyer or the Company.

The Company shall prepare or cause to be prepared and file or cause to be filed all Tax Returns of the Company that are required to be filed on or prior to the Closing Date (taking into account, for these purposes, any extension of the time to file any such Tax Return), including any amended Tax Returns required for such periods. Unless otherwise required by applicable Law, every material position taken on such Tax Returns shall be reasonably consistent with the methodology and elections employed by the Company in prior years. The Company shall provide Buyer with copies of any Tax Returns described in the preceding sentence that have not been provided to Buyer prior to the date hereof.

Sellers shall prepare or cause to be prepared and Buyer shall file or cause to be filed all Tax Returns for the Company for all Tax periods ending on or prior to the Closing Date that are required to be filed after the Closing Date. Unless otherwise required by applicable Law, every material position taken on such Tax Returns shall be reasonably consistent with the methodology and elections employed by the Company in prior years. Sellers shall permit Buyer to review and comment on each such Tax Return described in the preceding sentence prior to filing as provided herein. Not less than 30 days before the earlier of the due date of any such Tax Return or the date on which such Tax Returns are to be filed, Sellers shall furnish a draft of such Tax Return (as proposed to be filed) to Buyer for its review. Not less than 20 days before the earlier of the due date of such Tax Return or the date on which such Tax Return is to be filed, Buyer shall forward to Sellers any comments it may have relating to such Tax Return, and Buyer and Sellers agree to resolve in good faith any disputes regarding such Tax Return. Not less than 15 days before a payment is due with respect to such Tax Return (or extension request), Sellers shall forward to Buyer a schedule indicating the amount of Tax due with respect to the Tax Return (or extension request). Not less than five days before the earlier of the due date of such Tax Return (or extension request) or the date on which such Tax Return (or extension request) is to be filed, Sellers shall forward to Buyer the Tax Return (or extension request) to be filed. Any dispute regarding such Tax Returns that cannot be resolved by negotiation between Buyer and Sellers shall be resolved by a mutually agreed accounting firm (an “Independent Accounting Firm”); provided, that, in resolving a dispute with respect to a Tax Return, the Independent Accounting Firm shall be bound by the requirement that the Tax Return be prepared in a manner consistent with past reporting practices of the Company unless otherwise required in accordance with applicable Law (it being understood that a position taken on a Tax Return is in accordance with applicable Law if there is at least a reasonable basis for such position). The fees and expenses of the Independent Accounting Firm (a) shall be borne by Sellers in the proportion that the aggregate dollar amount of such disputed items so submitted that are successfully disputed by Buyer (as finally determined by the Independent Accounting Firm) bears to the aggregate dollar amount of such items so submitted and (b) shall be borne by Buyer in the proportion that the aggregate dollar amount of such disputed items so submitted that are unsuccessfully disputed by Buyer (as finally determined by the Independent Accounting Firm) bears to the aggregate dollar amount of such items so submitted. Buyer and Sellers shall make available to the Independent Accounting Firm and to each other all relevant books and records and working papers relating to the Tax Return under dispute and all other items reasonably requested by the Independent Accounting Firm. If any dispute with respect to a Tax Return is not resolved prior to the due date of such Tax Return, such Tax Return shall be filed in the manner in which the Party responsible for filing such Tax Return deems correct and the Tax shown as due on such Tax Return shall be paid in accordance with this, and if the dispute is subsequently resolved by the Independent Accounting Firm in a manner that differs from the manner in which the Tax Return was filed, Buyer shall cause the Company to promptly file an amended Tax Return in a manner consistent with the resolution of the dispute, and any Tax refund or Tax credit shall be paid to Sellers. Sellers shall reimburse Buyer for any Taxes of the Company with respect to such periods within 15 days after payment by Buyer or the Company of such Taxes to the extent such Taxes are not reflected in the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) shown on the Financial Statements (or in any notes thereto).

Buyer shall prepare or cause to be prepared and file or cause to be filed any Tax Returns of the Company for Tax periods which begin before the Closing Date and end after the Closing Date. Unless otherwise required by applicable Law, every material position taken on such Tax Returns shall be reasonably consistent with the methodology and elections employed by the Company in prior years. Buyer shall permit Sellers to review and comment on each such Tax Return described in the first sentence of this clause (c) prior to filing as provided herein. Not less than 30 days before the earlier of the due date of any such Tax Return or the date on which such Tax Returns are to be filed, Buyer shall furnish a draft of such Tax Return (as proposed to be filed) to Sellers for their review. Not less than 20 days before the earlier of the due date of such Tax Return or the date on which such Tax Return is to be filed, Sellers shall forward to Buyer any comments it may have relating to such Tax Return, and Buyer and Sellers agree to resolve in good faith any disputes regarding such Tax Return. Not less than five days before the earlier of the due date of such Tax Return or the date on which such Tax Return is to be filed, Buyer shall forward to Sellers the Tax Return to be filed. Any dispute regarding such Tax Returns that cannot be resolved by negotiation between Buyer and Sellers shall be resolved by the Independent Accounting Firm; provided, that, in resolving a dispute with respect to a Tax Return, the Independent Accounting Firm shall be bound by the requirement that the Tax Return be prepared in a manner consistent with past reporting practices of the Company unless otherwise required by applicable Law (it being understood that a position is in accordance with applicable Law if there is at least a reasonable basis for such position). The fees and expenses of the Independent Accounting Firm (a) shall be borne by Sellers in the proportion that the aggregate dollar amount of such disputed items so submitted that are unsuccessfully disputed by Sellers (as finally determined by the Independent Accounting Firm) bears to the aggregate dollar amount of such items so submitted and (b) shall be borne by Buyer in the proportion that the aggregate dollar amount of such disputed items so submitted that are successfully disputed by Sellers (as finally determined by the Independent Accounting Firm) bears to the aggregate dollar amount of such items so submitted.

Buyer and Sellers shall cooperate fully, as and to the extent reasonably requested by the other Party, in connection with the filing of Tax Returns pursuant to this Section 8.8 and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other Party’s request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Buyer and Sellers agree to (i) retain all books and records with respect to Tax matters pertinent to the Company relating to any Taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by Buyer or Sellers, any extensions thereof) of the respective Taxable periods, and to abide by all record retention agreements entered into with any Taxing authority, and (ii) give the other Party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other Party so requests, the Company or Sellers, as the case may be, shall allow the other Party to take possession of such books and records. In addition, Buyer and Sellers will, to the maximum extent allowed by applicable Law, elect with the relevant Taxing authorities to treat the portion any Tax periods described in Section 8.8(c) that begins before the Closing Date as a short Taxable period that ends on the Closing Date.

Buyer and Sellers further agree, upon request, to use their reasonable best efforts (including those actions described in Section 8.8(f)) to obtain any certificate or other document from any Governmental Body or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including with respect to the transactions contemplated hereby).

All transfer, documentary, sales, use, stamp, registration and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement shall be paid by Buyer when due, and Sellers and Buyer shall cooperate in filing all necessary Tax Returns and other documentation with respect to all such transfer, documentary, sales, use, stamp, registration and other Taxes and fees, and, if required by applicable Law, the other Party shall, and shall cause its Affiliates to, join in the execution of any such Tax Returns and other documentation. The expense of such filings shall be paid by Buyer.

Each of the representations and warranties of Buyer contained in Article IV shall be true and correct in all material respects (other than those representations and warranties of Buyer that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the date made and (having been deemed to have been made again on and as of the Closing Date in the same language) on and as of the Closing Date, except (i) to the extent that any such representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct in all material respects as of such specified date or (ii) any such inaccuracies or breaches which, in the aggregate, have not had or could not reasonably be expected to have a Material Adverse Effect.

Buyer shall have performed and complied in all material respects with each of the covenants and agreements required by this Agreement to be performed or complied with by it on or prior to the Closing Date.

No Order shall have been entered and be in effect by any Governmental Body of competent jurisdiction, and no statute, rule, regulation or other requirement shall have been promulgated or enacted and be in effect, that on a temporary or permanent basis restrains, enjoins or invalidates the transactions contemplated herein.

The Board of Directors of the Buyer shall have approved of the issuance by the Buyer to the order and direction of the Sellers of all of the Shares in accordance with Section 2.2 hereinabove and, in addition, the Board of Directors of the Buyer, if required, having also approved and received any required notices of such other matters as may be agreed to as between the Parties hereto prior the completion of the transactions contemplated by this Agreement.

Each of the representations and warranties of the Seller Parties contained in Article III and Article VII shall be true and correct in all material respects (other than those representations and warranties of the Seller Parties that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the date made and (having been deemed to have been made again on and as of the Closing Date in the same language) on and as of the Closing Date, except (i) to the extent that any such representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct in all material respects as of such specified date or (ii) any such inaccuracies or breaches which have been remedied in accordance with Section 7.3 or, (iii) in the aggregate, have not had or could not reasonably be expected to have a Material Adverse Effect.

Each of the Seller Parties shall have performed and complied in all material respects with each of the covenants and agreements required by this Agreement to be performed or complied with by it on or prior to the Closing Date.

No Order shall have been entered and be in effect by any Governmental Body of competent jurisdiction, and no statute, rule, regulation or other requirement shall have been promulgated or enacted and be in effect, that on a temporary or permanent basis restrains, enjoins or invalidates the transactions contemplated herein.

Buyer shall have received certified copies of the resolutions duly adopted by each of Seller’s and the Company’s board of managers or other governing body, as applicable, authorizing the execution, delivery and performance of this Agreement and the other agreements contemplated hereby, and the consummation of all transactions contemplated hereby and thereby.

Buyer shall have received the written resignation of each of the Company’s managers and officers, such resignation to be effective immediately upon the consummation of the transactions contemplated in this Agreement, in form and substance reasonably acceptable to Buyer.

The representations, warranties and covenants of the Parties contained in this Agreement shall survive the Closing and claims may be asserted with respect thereto to the extent and only to the extent permitted by this Article X. Subject to the other limitations and procedures of this Article X, the liability of the Seller Parties under the representations and warranties of the Seller Parties contained in Section 3.16(a) and Article VII shall terminate at Closing, except for any indemnification obligations arising under Section 7.3(c); (ii) the liability of the Seller Parties under the representations and warranties of the Seller Parties contained in Article III (other than Section 3.16(a)) shall survive until the eighteen-month anniversary of the Closing Date, except that (A) the liability of the Seller Parties under the representations and warranties of the Seller Parties contained in Section 3.1, Section 3.2, Section 3.5, Section 3.8, Section 3.9 and Section 3.10 shall survive indefinitely, and (B) the liability of the Seller Parties under the representation and warranty of the Seller Parties contained in Section 3.13 shall survive the Closing Date until the end of the applicable statute of limitations period and (ii) the liability of Buyer under the representations and warranties of Buyer contained in Section 4.2, Section 4.3, Section 4.7 and Section 4.10 shall survive the Closing Date until the end of the applicable statute of limitations period. All of the covenants or other agreements of the Parties contained in this Agreement shall survive until fully performed or fulfilled, unless and to the extent only that non-compliance with such covenants or agreements is waived in writing by the Party entitled to such performance. The period, if any, for which a representation, warranty and covenant survives is herein called the “Survival Period.” From and after the expiration of a Survival Period, a Party shall be liable with respect to any representation or warranty or covenant to which such Survival Period relates only as to which notice has been received in accordance with Section 13.5.

No Party shall have any indemnification obligation pursuant to this Article X or otherwise in respect of any representation, warranty or covenant unless it shall have received from the Party seeking indemnification written notice of the existence of the claim for or in respect of which indemnification in respect of such representation, warranty or covenant is being sought on or before the expiration of the Survival Period with respect to such representation, warranty or covenant. Such notice shall set forth with reasonable specificity (i) the basis under this Agreement, and the facts that otherwise form the basis of such claim, (ii) the estimate of the amount of such claim (which estimate shall not be conclusive of the final amount of such claim) and an explanation of the calculation of such estimate, including a statement of any significant assumptions employed therein, and (iii) the date on and manner in which the Party delivering such notice became aware of the existence of such claim.

In addition to the indemnification obligations of Sellers under Section 7.3(c) and subject in all respects to the terms and conditions of this Article X (including, without limitation, the Survival Period limitations contained in Section 10.1(a)), Sellers shall indemnify, defend and hold harmless, to the fullest extent permitted under applicable Law, each of Buyer, the Company, its Affiliates and its and their respective successors and permitted assigns and all of their respective directors, managers, officers, employees, stockholders, members, partners, agents, attorneys and representatives (collectively, the “Buyer Indemnified Parties”) from and against any and all losses, liabilities, claims, demands, judgments, damages (excluding incidental and consequential damages), fines, settlements, penalties, suits, actions, costs and expenses (including reasonable attorneys’ fees and expenses) (individually and collectively, “Losses”) asserted against, resulting to, imposed upon, or incurred by Buyer, directly or indirectly, by reason of or resulting from (a) the failure of any surviving representations and warranties of the Company or Sellers contained in Article III or any certificate delivered by Sellers or the Company at Closing to have been true and correct when made or as of the Closing Date (except for such representations and warranties that are made as of a specified date, in which case the failure of such representations and warranties to be true and correct as of such date); or (b) any breach of any covenant or agreement of Sellers or the Company contained in this Agreement (other than the breach of any of such obligations of the Company that occurs after the Closing Date).

Sellers shall cooperate, and cause its Affiliates to cooperate, with any Buyer Indemnified Party in the defense of any claim for Losses pursuant to Section 10.2(a) and shall provide access to properties and individuals as reasonably requested and furnish or cause to be furnished records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials or appeals, as may be reasonably requested in connection therewith.

Notwithstanding anything to the contrary contained in this Agreement, the maximum aggregate amount for which Sellers may be liable for indemnification under Section 10.2(a) is the Purchase Price.

The indemnification obligations of the Parties pursuant to this Article X shall be limited to actual Losses and shall not include incidental, consequential, indirect, punitive, or exemplary damages, provided that any incidental, consequential, indirect, punitive, or exemplary damages recovered by a third party (including a Governmental Body, but excluding any Affiliate of any Party) against a Party entitled to indemnity pursuant to this Article X shall be included in the damages recoverable under such indemnity. Indirect or consequential loss, including all of the following:

loss of production, including production of petroleum or petroleum products;

loss of prospective economic advantage or benefit;

loss of business opportunity;

punitive or exemplary damages; and

lost profits.

In the event that any Legal Proceedings shall be instituted or any claim or demand for which a party (an “Indemnifying Party”) would be liable to the other party under Section 10.2 or Section 5.3 (an “Indemnified Party”) is asserted against or sought to be collected from an Indemnified Party by a third party (an “Indemnification Claim”), the Indemnified Party shall with reasonable promptness notify the Indemnifying Party of such claim or demand, but the failure so to notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations under this Article X, except to the extent the Indemnifying Party demonstrates that the defense of such claim or demand is materially prejudiced thereby.

Subject to the provisions of this Section 10.4, the Indemnifying Party shall have the right, at its sole expense, to be represented by counsel of its choice, which must be reasonably satisfactory to the Indemnified Party, and to defend against, negotiate, settle or otherwise deal with any Indemnification Claim which relates to any Losses indemnified against by it hereunder; provided, that the Indemnifying Party shall have acknowledged in writing to the Indemnified Party its unqualified obligation to indemnify the Indemnified Party as provided hereunder. If the Indemnifying Party elects to defend against, negotiate, settle or otherwise deal with any Indemnification Claim which relates to any Losses indemnified against by it hereunder, it shall within five days of the Indemnified Party’s written notice of the assertion of such Indemnification Claim (or sooner, if the nature of the Indemnification Claim so requires) notify the Indemnified Party of its intent to do so; provided, that the Indemnifying Party must conduct the defense of the Indemnification Claim actively and diligently thereafter in order to preserve its rights in this regard. If the Indemnifying Party elects not to defend against, negotiate, settle or otherwise deal with any Indemnification Claim which relates to any Losses indemnified against hereunder, fails to notify the Indemnified Party of its election as herein provided or contests its obligation to indemnify the Indemnified Party for such Losses under this Agreement, the Indemnified Party may defend against, negotiate, settle or otherwise deal with such Indemnification Claim. If the Indemnified Party defends any Indemnification Claim, then the Indemnifying Party shall reimburse the Indemnified Party for the all of the costs and expenses related to defending such Indemnification Claim upon submission of period bills. If the Indemnifying Party shall assume the defense of any Indemnification Claim, the Indemnified Party may participate, at his or its own expense, in the defense of such Indemnification Claim; provided, however, that such Indemnified Party shall be entitled to participate in any such defense with separate counsel at the expense of the Indemnifying Party if (i) so requested by the Indemnifying Party to participate or (ii) in the reasonable opinion of counsel to the Indemnified Party, a conflict or potential conflict exists between the Indemnified Party and the Indemnifying Party that would make such separate representation advisable. The Parties agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such Indemnification Claim. Notwithstanding anything in this Section 10.4 to the contrary, neither the Indemnifying Party nor the Indemnified Party shall, without the written consent of the other party, settle or compromise any Indemnification Claim or permit a default or consent to entry of any judgment unless the claimant and such party provide to such other party an unqualified release from all liability in respect of the Indemnification Claim.

After any final decision, judgment or award shall have been rendered by a Governmental Body of competent jurisdiction and the expiration of the time in which to appeal therefrom, or a settlement shall have been consummated, or the Indemnified Party and the Indemnifying Party shall have arrived at a mutually binding agreement with respect to an Indemnification Claim hereunder, the Indemnified Party shall forward to the Indemnifying Party notice of any sums due and owing by the Indemnifying Party pursuant to this Agreement with respect to such matter and the Indemnifying Party shall pay all of such remaining sums so due and owing to the Indemnified Party in immediately available funds within five Business Days after the date of such notice.

IT IS THE EXPRESS INTENTION OF THE PARTIES THAT EACH PARTY TO BE INDEMNIFIED PURSUANT TO THIS ARTICLE X SHALL BE INDEMNIFIED AND HELD HARMLESS FROM AND AGAINST ALL LOSSES AS TO WHICH INDEMNITY IS PROVIDED FOR UNDER THIS ARTICLE X, NOTWITHSTANDING ANY SUCH LOSSES ARISING OUT OF OR RESULTING FROM THE ORDINARY, STRICT, SOLE, OR CONTRIBUTORY NEGLIGENCE OF SUCH PARTY AND REGARDLESS OF WHETHER ANY OTHER PARTY (INCLUDING THE OTHER PARTIES) IS OR IS NOT ALSO NEGLIGENT. THE PARTIES ACKNOWLEDGE THAT THE FOREGOING COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND IS CONSPICUOUS.

an assignment of the Interests together with any certificates representing the Interests, duly endorsed (or accompanied by duly executed stock powers);

a certified copy of an ordinary resolution of the shareholders of the Company approving the terms and conditions of this Agreement and the transactions contemplated hereby and thereby together with certification of any required notice to all shareholders of the Company of such written consent resolutions;

all documentation as may be necessary and as may be required by counsel for the Buyer, acting reasonably, to ensure that all of the Interests have been transferred, assigned and are registerable in the name of and for the benefit of the Buyer under all applicable corporate and securities laws;

a certified copy of the resolutions of the Board of Directors of the Company authorizing the transfer by the Sellers to the Buyer of the Interests;

a copy of all corporate records and books of account of the Company and including, without limiting the generality of the foregoing, a copy of all minute books, share register books, share certificate books and annual reports of the Company;

all necessary consents and approvals in writing to the completion of the transactions contemplated herein;

that all Interests have been duly authorized and issued and are fully paid and non- assessable;

all necessary steps and proceedings have been taken in connection with the execution, delivery and performance of this Agreement and the transactions contemplated herein;

that the Interests have been duly issued to and registered in the name of the Buyer in compliance with all applicable corporate and securities laws;

based on actual knowledge and belief, such counsel knows of no claims, judgments, actions, suits, litigation, proceedings or investigations, actual, pending or threatened, against either the Sellers or the Company which might materially affect either the Company, the Company’s Properties or which could result in any material liability to either of the Company, the Company’s Properties;

all such other documents and instruments as the Buyer’s counsel may reasonably require; and

the other certificates, documents and agreements as required by Section 9.1.

a certified copy of an ordinary resolution of the directors of the Buyer approving the terms and conditions of this Agreement and the transactions contemplated hereby;

share certificates, subject to the normal resale provisions applicable thereto, representing all of the Shares issued and registered in the name or names as notified by the Sellers to the Buyer prior to Closing in accordance with Sections 2.2 and 2.3 hereinabove;

all necessary consents and approvals in writing to the completion of the transactions contemplated herein;

all such other documents and instruments as the Sellers’ and the Company’s counsel may reasonably require; and

the other certificates, documents and agreements as required by Section 9.2.

by mutual written consent of Buyer and Sellers;

by either Buyer or Sellers, if:

the Closing does not occur on or before September 30, 2011 (the “Termination Date”) for any reason; provided, however, that such Termination Date may be extended in writing by mutual agreement of the Parties; or

there shall be any statute, rule, or regulation that makes consummation of the transactions contemplated herein illegal or otherwise prohibited or a Governmental Body shall have issued an order, decree, or ruling or taken any other action permanently restraining, enjoining, or otherwise prohibiting the consummation of the transactions contemplated herein, and such order, decree, ruling, or other action shall have become final and non- appealable;

by Sellers, if (i) Buyer shall have failed to fulfill in any material respect any of its obligations under this Agreement; or (ii) any of the representations and warranties of Buyer contained in Article IV shall not be true and correct in all material respects and, in the case of each of clauses (i) and (ii), such failure, misrepresentation, or breach of warranty (provided it can be cured) has not been cured prior to the Termination Date; or (iii) if the conditions to Closing specified in Section 9.1 have not been satisfied;

by Buyer, if (i) Sellers shall have failed to fulfill in any material respect any of its obligations under this Agreement; or (ii) any of the representations and warranties of Sellers or the Company contained in Article III and Article VII shall not be true and correct in all material respects and, in the case of each of clauses (i) and (ii), such failure, misrepresentation, or breach of warranty (provided it can be cured) has not been cured prior to the Termination Date; or (iii) if the conditions to Closing specified in Section 9.2 have not been satisfied; or

by Buyer at anytime if it is not satisfied, in its sole discretion with the results of its due diligence, or Sellers’ rejection of an Environmental Defect Value as provided in Section 7.3(c).

To terminate this Agreement pursuant to Section 12.1 (other than Section 12.1(a)), the terminating Party must notify the other Party specifying the provision hereof pursuant to which such termination is made, whereupon (i) this Agreement shall become void and have no effect, except that the agreements contained in this Article XII, in Section 5.3, Section 7.6, Section 8.5 and in Article XIII shall survive the termination hereof.

Upon the termination of this Agreement in accordance with this Article XII, Sellers will be free to sell the Interests (or any portion thereof) to any other Person without any limitation under or because of this Agreement. Buyer will promptly execute any instrument evidencing the termination of Buyer’s right to acquire the Interests as Sellers may reasonably request.

Upon the termination of this Agreement in accordance with this Article XII, Buyer will return to Sellers all data and other information (and all copies thereof and analysis therefrom) furnished to Buyer by or on behalf of Sellers or the Company in connection with this transaction.

Calculation of Time Period. When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded unless otherwise specified. If the last day of such period is a non- Business Day, the period in question shall end on the next succeeding Business Day.

Gender and Number. Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa.

Headings. The division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement. All references in this Agreement to any “Section” are to the corresponding Section of this Agreement unless otherwise specified.

Herein. The words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.

Including. The word “including” or any variation thereof means (unless the context of its usage otherwise requires) “including, without limitation” and “including but not limited to” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.

No Presumption. The Parties have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.