TRANSACTION AGREEMENT

This TRANSACTION AGREEMENT (hereinafter the “Agreement”) is entered into and
shall become effective as of August 21, 2017, by and between VICTORY ENERGY
CORPORATION, a Nevada corporation (“Victory”), and ARMACOR VICTORY VENTURES,
LLC, a Delaware limited liability company (“Armacor”). Victory and Armacor are
referred to individually as a “Party” and, collectively, as the “Parties.”

RECITALS

A.    On June 9, 2017, Victory and Armacor Holdings, LLC, a Delaware limited
liability company and an affiliate of Armacor (“Armacor Holdings”), entered into
a nonbinding Letter of Intent (the “Letter of Intent”) that contemplated, among
other things, (i) the granting by Armacor to Victory of a worldwide, perpetual,
royalty free, fully paid up and exclusive sublicense (the “License”) to all of
Armacor’s owned and licensed intellectual property for use in the Oilfield
Services Business (as that term is defined below), and (ii) the contribution by
Armacor to Victory of Five Million Dollars ($5,000,000) (the “Cash
Contribution”). Immediately prior to the execution of this Agreement on the date
hereof, Armacor Holdings assigned the Letter of Intent to Armacor, and the
Parties desire to hereby enter into this Agreement to set forth the definitive
terms and conditions of the transactions contemplated by the Letter of Intent.
B.    In consideration for the License and the Cash Contribution, Victory is
issuing to Armacor 800,000 shares (the “Series B Shares”) of its newly
designated Series B Convertible Preferred Stock (the “Series B Preferred
Stock”). The Series B Shares will constitute at Closing (as defined below) 90%
of the issued and outstanding common stock of Victory on a fully-diluted basis
and after giving effect to the issuance of the Series B Preferred Stock and
other securities of Victory being issued as contemplated by this Agreement and
the Closing Documents (as defined below) other than shares of Victory Common
Stock issuable upon conversion of the VPEG Note (as defined below). The Series B
Preferred Stock does not have the right to vote except as required by law, will
not accrue dividends, and will not be convertible into Victory Common Stock
until (i) Victory’s shareholders have approved (“Shareholder Approval”) the
matters to be voted on at the Shareholders’ Meeting (as defined below), (ii) the
entire Cash Contribution has been made, and (iii) certain other conditions as
specified herein are satisfied.
C.    On or prior to the Closing, Victory has arranged for Visionary Private
Equity Group I, L.P. (“VPEG”) to loan to Victory under the terms of a loan
agreement between Victory and VPEG, dated on or about the date hereof, Five
Hundred Thousand Dollars ($500,000) (the “VPEG Loan”), which VPEG Loan is
evidenced by a secured convertible promissory note (the “VPEG Note”) in the
principal amount of Five Hundred Fifty Thousand Dollars ($550,000) as the VPEG
Loan was made at an original issue discount of Fifty Thousand Dollars ($50,000).
D.    On or before September 1, 2017 Armacor will pay to VPEG and to certain
creditors of Victory a total of approximately $594,154 in liabilities, including
$550,000 owed to VPEG under the VPEG Note and certain other liabilities owed to
various other Victory creditors and Victory is obtaining written agreements from
all of its creditors regarding the orderly repayment of the

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remaining balance of such liabilities. In addition, Armacor and Victory are
agreeing upon a schedule of liabilities and working capital needs that is set
forth on Exhibit A to this Agreement (the “Schedule of Liabilities”) that are
expected to arise between the Closing and the date that Shareholder Approval is
obtained. In exchange for Armacor paying off the VPEG Loan, the amounts owed to
the other Victory creditors and funding the Schedule of Liabilities, Armacor
will receive a secured delayed draw term note (the “Armacor Note”) in the
original principal amount of the amount $594,154, with additional amounts being
added to principal as additional advances are made to fund the Schedule of
Liabilities or other expenses that Armacor agrees to fund. The Armacor Note will
be secured by a first priority security interest in all of the assets of
Victory. Upon obtaining Shareholder Approval, all of the obligations of Victory
under the Armacor Note will be forgiven and the outstanding principal amount of,
and all accrued, but unpaid interest under, the Armacor Note will be credited
toward Armacor’s obligation to make the Cash Contribution.
E.    Victory will hold a special meeting of its shareholders (the
“Shareholders’ Meeting”) as soon as possible after the date hereof in order to
obtain Shareholder Approval of, among other things, amendments to the Articles
of Incorporation of Victory to effect a reverse split of Victory’s common stock
and an increase in the number of authorized shares of Victory’s common stock
such that there will be sufficient common stock authorized to allow for the
conversion of the outstanding Series B Preferred Stock and other series of
preferred stock that will be outstanding on the date of the Shareholders’
Meeting (collectively, the “Charter Amendment”).
F.    If, Victory does not obtain Shareholder Approval on or before the first
anniversary of the Closing because of Victory’s breach of any covenant,
representation, or other provision contained in this Agreement, then Armacor, at
its option, may unwind the transactions contemplated by this Agreement as
described in more detail herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises herein contained, the
Parties hereto, intending to be legally bound, hereby agree as follows:
1.ARMACOR’S OBLIGATIONS. In consideration for the Series B Shares and Victory’s
other obligations to Armacor hereunder, Armacor shall perform the following
covenants:
(a)    Grant of Licenses. At the Closing, Armacor and Victory will enter into
the exclusive sublicense agreement in the form of Exhibit B to this Agreement
(the “License Agreement”) pursuant to which Armacor will grant to Victory the
License. Also at the Closing, Armacor will cause Liquidmetal Coatings
Enterprises, LLC, a Delaware limited liability company and an affiliate of
Armacor (“LMCE”), to enter into a trademark license agreement, substantially in
the form set forth as Exhibit C hereto (the “Trademark License Agreement”),
under which LMCE will license the “Liquidmetal Coatings” and “Armacor”
trademarks and service marks to Victory.
(b)    Cash Contribution.
(i)    Within three (3) business days after the satisfaction of the Funding
Conditions (as defined below), Armacor shall contribute to Victory (i) an amount
equal to (x) Five Million

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Dollars ($5,000,000) less (y) the outstanding balance of the Armacor Note as of
the date of the conversion of the Series B Preferred Stock, with such payment to
be made in cash in immediately available funds to an account specified by
Victory in writing, and (ii) the Armacor Note, which shall thereupon be deemed
cancelled and satisfied in full. Notwithstanding the foregoing, Armacor shall
have the right, but not the obligation, to waive satisfaction of any of the
Funding Conditions in writing.
(ii)    If the Funding Conditions have been satisfied, but Armacor fails to make
the Cash Contribution within 30 days of the satisfaction of the Funding
Conditions, Victory may, in its sole discretion, seek up to $5 million of equity
capital from other sources, including, without limitation, from VPEG, its
affiliates and designees under the option granted to VPEG pursuant to Section 5
of that certain Loan Agreement between VPEG and Victory, dated on or about the
date hereof.
(iii)    If the Funding Conditions have been satisfied, but Armacor fails to
make the Cash Contribution, then a number of Armacor’s Series B Shares (or, if
converted, the Common Stock equivalent) shall be cancelled in accordance with
the following formula.
Cancelled Series B Shares = X% of 213,333

For purposes of the foregoing formula:
X=
(A - B)/A

A=
5,000,000

B=
the amount of the Cash Contribution funded by Armacor

Notwithstanding the foregoing, under no circumstances shall the number of
Armacor Series B Shares be reduced to less than 586,667 Series B Shares (or, if
converted, the Common Stock equivalent) without Armacor’s prior written consent.
The above cancellation shall be made at such time as Victory has reasonably
determined that Armacor will not be able to fund any additional amounts under
the Cash Contribution and Victory notifies Armacor of the same in writing upon
30 days prior written notice, provided that such notice shall not be delivered
any earlier than 30 days after the date on which the Funding Conditions are
satisfied.

For example, if Armacor funds $1 million of the Cash Contribution, then
170,666.4 Series B Shares would be cancelled by operation of the above formula
and Armacor would be left with 629,333.6 Series B Shares.

As soon as possible, but in any event within ten (10) days, following Armacor’s
failure to make all or any part of the Cash Contribution, Victory and Armacor
shall enter into a cancellation agreement that is mutually satisfactory to both
parties and consistent with this Section 1(b) that evidences the cancellation of
Series B Shares (or, if converted, the Common Stock equivalent) and Victory and
Armacor shall file an amendment to the Certificate of Designation of the Series
B Preferred Stock

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to reflect the revised number of Series B Shares and to permit the conversion of
such Series B Shares into Common Stock of Victory.

The cancellation of Series B Shares in accordance with this Section 1(b) shall
be Victory’s sole remedy for the failure of Armacor to fund the Cash
Contribution, including any failure by Armacor to make the loans described in
Section 1(c) below. In the event of a stock split, stock combination,
recapitalization or similar transaction an equitable adjustment shall be made to
all share numbers and price per share amounts.

(c)    Loans to Victory.
(i)    Initial Draw. On the terms and subject to the conditions hereinafter set
forth, Armacor shall lend to Victory (the “Loan”) on or before September 1, 2017
in accordance with the Armacor Note Five Hundred Ninety-Four Thousand, One
Hundred Fifty-Four Dollars ($594,154) (the “Initial Draw”). The Initial Draw
shall be used to repay the VPEG Loan and to pay Victory creditors as expressly
provided in the Disbursement Instructions (as defined below) and not for any
other purpose.
(ii)    Schedule of Liabilities. Exhibit A to this Agreement is the Schedule of
Liabilities, which reflects Victory’s expected working capital needs that will
arise between the Closing and the date that Shareholder Approval is obtained.
The Schedule of Liabilities reflects the amount of expected liabilities, the
date when such liabilities are expected to come due, the party to whom such
liabilities are owed and other information relating to expected Victory
liabilities between the Closing and the date that Shareholder Approval is
obtained. From and after September 1, 2017, Victory may, in its sole discretion,
notify Armacor in writing that it desires to draw (each a “Draw”) additional
amounts under the Loan that are consistent with the Schedule of Liabilities. To
be valid, any such notification (a “Draw Notification”) must (i) be received by
Armacor before the sooner of (a) the date that the Parties terminate this
Agreement, or (b) the first anniversary of the date hereof, (ii) specify the
amount being borrowed (which shall not exceed amounts specified in the Schedule
of Liabilities without the consent of Armacor), and (iii) contain a
certification, signed by an executive officer of Victory, certifying that (x) no
material breach or default by Victory has occurred under this Agreement, the
Note, or any other Closing Document, and Victory has performed all obligations
required by Victory to be performed through the date of such certification under
the Closing Documents, (y) all representations and warranties made by Victory in
this Agreement are true and correct in all material respects with the same
effect as though the representations and warranties had been made on and as of
the proposed Draw date, and (z) there has not been any change, circumstance,
condition, or event which has had or could have a Material Adverse Effect on
Victory. Within three (3) days after Armacor’s receipt of a Draw Notification
(or such other date as Victory and Armacor may mutually agree in writing),
Armacor shall be obligated to complete the specified Draw, so long as there is
no existing or reasonably anticipated default by Victory under this Agreement or
any agreement being entered into in connection with this Agreement at the
Closing (the “Closing Documents”); provided, however, that notwithstanding the
foregoing, Victory may withdraw a Draw Notification by written notice to Armacor
that is received prior to the date that the Draw has been made. For each Draw,
Victory shall execute an amendment to the Note to add thereto the principal
amount of such Draw and Armacor shall disburse the amount of

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the Draw by wire transfer of immediately available funds in United States
Dollars to the account specified by Victory in writing.
(iii)    Armacor Note. The Loan shall be evidenced by the Armacor Note in the
form attached as Exhibit D in the principal amount of the Initial Draw.
Principal and interest on the Armacor Note shall be due and payable in the
manner and at the times set forth in the Armacor Note. All payments on the
Armacor Note shall be made to Armacor at its address as specified on the
signature page to this Agreement in federal or other immediately available
funds.
(iv)    Use of Proceeds. Victory shall use the Initial Draw and any subsequent
Draws only for the uses specified in the Disbursement Instructions (as defined
below) unless otherwise agreed to in writing by Armacor.
(v)    Security Agreement. On the date that the Loan is made to Victory, Victory
and Armacor shall enter into the security agreement in the form of Exhibit E to
this Agreement (the “Security Agreement”). Pursuant to the Security Agreement,
Victory shall grant to Armacor a first priority security interest in all of its
assets as collateral to secure Victory’s obligations under the Armacor Note,
including its obligation to repay the Loan when the Loan comes due.
(vi)    Payment and Distribution of Documents at the Closing. Armacor shall pay
the Initial Draw by wire transfer of immediately available funds in United
States Dollars and shall be responsible for disbursement of those amounts
according to disbursement instructions to be mutually agreed upon between
Victory and Armacor (the “Disbursement Instructions”). Separate Disbursement
Instructions shall be a condition to the funding of each subsequent Draw. The
Disbursement Instructions shall allocate the proceeds of each Draw to the
specific uses therefor.
2.    VICTORY’S OBLIGATIONS. In consideration for the License, the Cash
Contribution, and Armacor’s other obligations to Victory hereunder, Victory
shall perform the following covenants
(a)    Issuance of Series B Shares. At the Closing, Victory shall issue to
Armacor the Series B Shares. The Series B Shares will constitute at Closing 90%
of the issued and outstanding common stock of Victory on a fully-diluted basis
and after giving effect to the issuance of the Series B Preferred Stock and all
other transactions occurring on or about the Closing Date pursuant to this
Agreement and the Closing Documents. The Series B Preferred Stock has the
rights, preferences, and limitations specified in the Certificate of Designation
of the Series B Preferred Stock in the form attached hereto as Exhibit F.
(b)    Issuance of the Armacor Note. On the date that the Initial Draw is funded
and in consideration for the Initial Draw Victory shall issue the Armacor Note
to Armacor and enter into the Security Agreement to grant to Armacor a first
priority security interest in all of the assets of Victory.
(c)    Proxy Statement.

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(i)    Victory shall prepare, in consultation with Armacor, and file with the
Securities and Exchange Commission (the “SEC”) a preliminary proxy or
information statement relating to (i) a reverse split of Victory’s common stock
and an increase in the number of authorized shares of Victory’s common stock
such that there will be sufficient common stock authorized to allow for the
conversion of the outstanding Series B Preferred Stock and other series of
Victory Preferred Stock and (ii) the Divestiture (as defined in the Divestiture
Agreement) (a “Proxy Statement”) promptly after the date of this Agreement (and
in no event later than thirty (30) days after the Closing) and use its
reasonable best efforts to:
(A)    obtain and furnish the information required to be included by the SEC in
the preliminary Proxy Statement;
(B)    respond promptly to any comments made by the SEC or its staff with
respect to the preliminary Proxy Statement;
(C)    cause a definitive Proxy Statement (together with any amendments and
supplements thereto) to be mailed to its shareholders as soon as reasonably
practicable containing all information required under applicable law to be
furnished to Victory’s shareholders in connection with the matters to be
approved by the shareholders;
(D)    promptly amend or supplement any information provided by it for use in
the preliminary or definitive Proxy Statement (including any amendments or
supplements thereof) if and to the extent that it shall have become false or
misleading in any material respect and take all steps necessary to cause the
Proxy Statement as so amended or supplemented to be filed with the SEC and to be
disseminated to Victory’s shareholders, in each case as and to the extent
required by applicable United States federal securities laws; and
(E)    cause the preliminary and definitive Proxy Statements, on each relevant
filing date, on the date of mailing to Victory’s shareholders and at the time of
the Shareholders’ Meeting, not to contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading, and cause the Proxy Statement to
comply as to form in all material respects with the provisions of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and
regulations promulgated thereunder.
Notwithstanding the foregoing, Victory shall have no responsibility with respect
to any information supplied by Armacor for inclusion or incorporation by
reference in the Proxy Statement. Armacor and its counsel shall be given a
reasonable opportunity to review and comment on the preliminary and the
definitive Proxy Statement and any amendment or supplement to the preliminary or
the definitive Proxy Statement, as the case may be, each time before any such
document is filed with the SEC, and Victory shall give reasonable and good faith
consideration to any comments made by Armacor and its counsel.

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(ii)    Armacor shall use reasonable best efforts to:
(A)    cause the information supplied or to be supplied by or on behalf of
Armacor in writing expressly for inclusion or incorporation by reference in the
Proxy Statement not to contain, on the date of the mailing to Victory’s
shareholders and at the time of the Shareholders’ Meeting, any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading; and
(B)    promptly inform Victory if at any time prior to the Shareholders’
Meeting, any event relating to Victory or any of its affiliates, officers or
directors should be discovered by Armacor which is required to be set forth in a
supplement to the Proxy Statement.
(d)    Meeting of Company Shareholders. Victory shall take all action reasonably
necessary in accordance with Nevada law and Victory’s articles of incorporation
and bylaws to establish a record date, duly call, give notice of, convene and
hold the Shareholders’ Meeting reasonably promptly after the date of any SEC
comments on the Proxy Statement have been resolved and the final Proxy Statement
is otherwise ready for dispatch and, in connection therewith, Victory shall mail
the Proxy Statement to the Victory’s shareholders in advance of such meeting.
The Proxy Statement shall include the board recommendation of Victory that
shareholders approve the proposals coming before them at the Shareholders’
Meeting, and Victory will use reasonable best efforts to solicit from its
shareholders proxies in favor of the adoption of proposals coming before the
Shareholders’ Meeting and to take all other actions necessary or advisable to
pursue the vote or consent of its shareholders, including such actions as are
required by the rules and regulations of the OTCQB or Nevada law or any other
applicable laws to obtain such approvals. Unless this Agreement is terminated by
Victory or Armacor, as the case may be, Victory shall use reasonable best
efforts to ensure that any Shareholders’ Meeting (including any adjournment or
postponement thereof) is called, noticed, convened, held and conducted, and that
all proxies solicited by it in connection with the Shareholders’ Meeting
(including any adjournment or postponement thereof) are solicited, in compliance
with Nevada law, Victory’s Articles of Incorporation and Bylaws, the rules of
the OTCQB and all other applicable laws.
(e)    Funding Conditions. Within three (3) business days after Shareholder
Approval is obtained, Victory will (i) cause the Charter Amendment to be filed
and accepted for filing with the State of Nevada, (ii) cause the aforementioned
reverse stock split to be effected, and (iii) deliver to Armacor a written
certification, signed by an executive officer of Victory, certifying that (x) no
material breach or default by Victory has occurred under this Agreement or any
other Closing Document, and Victory has performed all obligations required by
Victory to be performed through the date of such certification under the Closing
Documents, (y) all representations and warranties made by Victory in this
Agreement are true and correct in all material respects with the same effect as
though the representations and warranties had been made on and as of the date of
such certificate, and (z) there has not been any change, circumstance,
condition, or event which has had or could

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have a Material Adverse Effect on Victory (the foregoing (i), (ii), and (iii)
being referred to as the “Funding Conditions”).
3.    ARMACOR’S RIGHT TO UNWIND.
(a)    Right to Unwind. If the Funding Conditions are not satisfied on or before
the first anniversary of the Closing (or if any circumstances or event occurs
that makes it reasonably unlikely that the Funding Conditions will be satisfied
on or before the first anniversary of the Closing), other than by reason of a
material breach of this Agreement by Armacor, then Armacor, at its option, shall
have the right to unwind the transactions contemplated by this Agreement (the
“Right to Unwind”) in accordance with this Section 3.
(b)    Exercise of Right to Unwind. Armacor may exercise its Right to Unwind at
any time before ninety (90) days following the first anniversary of the Closing,
which time period may be extended by the mutual agreement of the Parties. If
Armacor elects to exercise the Right to Unwind, it will deliver to Victory a
written notice (the “Unwind Notice”) duly executed by Armacor (1) stating that
Armacor is exercising such Right to Unwind, (1) describing to Victory in
reasonable detail the basis that gives rise to Armacor’s Right to Unwind; and
(1) specifying a date for the closing of the unwinding transaction which must be
a date that is no later than sixty (60) days following the date that Unwind
Notice is given.
(c)    Closing of Unwinding Transaction. At the closing of the unwinding
transaction (the “Unwinding Closing”), (i) Victory shall cancel all outstanding
Series B Shares issued to Armacor, (ii) the License shall be terminated, and
(iii) all outstanding principal and accrued interest under the Armacor Note
shall be repaid over a period of twelve (12) months following the Unwinding
Closing in equal monthly installments upon the terms and conditions set forth in
the Armacor Note.
4.    REPRESENTATIONS AND WARRANTIES OF VICTORY. Except as specifically
described in the SEC Reports (as defined below) or on the disclosure schedule
that is attached to this Agreement (the “Disclosure Schedule”), Victory
represents and warrants to Armacor that the statements contained in this Section
4 are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 4).
(a)    Subsidiaries. Victory owns, directly or indirectly, all of the capital
stock or other equity interests of each “significant subsidiary” as defined in
Rule 1-02(w) of the Regulation S-X promulgated by the SEC under the Exchange Act
(each a “Subsidiary”) free and clear of any lien, security interest, mortgage,
title claim, encumbrance, adverse claim, or pledge (a “Lien”) other than Liens
relating to Aurora that arise under the Aurora partnership agreement and all of
the issued and outstanding shares of capital stock or other equity interests of
each Subsidiary are validly issued and are fully paid, nonassessable and free of
preemptive and similar rights to subscribe for or purchase securities.
(b)    Organization and Qualification. Victory and each Subsidiary are duly
incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and

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use its properties and assets and to carry on its business as currently
conducted. Neither Victory nor any Subsidiary is in violation of any of the
provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. Victory and each Subsidiary are duly
qualified to conduct its respective businesses and are in good standing in each
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect. For purposes of this Agreement, “Material Adverse Effect” means any
event, change, circumstance, effect or other matter that has, or could
reasonably be expected to have, either individually or in the aggregate with all
other events, changes, circumstances, effects or other matters, with or without
notice, lapse of time or both, (i) a material and adverse effect on the
legality, validity or enforceability of this Agreement or any Closing Document,
(ii) a material and adverse effect on the results of operations, assets,
properties, business or condition (financial or otherwise) of Victory
individually or Victory and the Subsidiaries, taken as a whole, or (iii) a
material and adverse impairment to Victory’s ability to perform on a timely
basis its obligations under this Agreement or any Closing Document, provided,
however, that any effect(s) arising from or relating to any of the following
shall not be deemed, either alone or in combination, to constitute, and shall
not be taken into account in determining whether there has been or will be, a
Material Adverse Effect: (A) conditions affecting the industries in which the
Victory’s business operates (which effect(s), in each case, do not
disproportionately affect Victory’s business relative to other companies
conducting businesses similar to Victory’s business); (B) general economic,
financial market or geopolitical conditions (which effect(s), in each case, do
not disproportionately affect Victory’s business relative to other companies
conducting businesses similar to Victory’s business); (C) any change in
accounting rules (including GAAP), or the enforcement, implementation or
interpretation thereof, after the date hereof; or (D) any effect caused by,
relating to or resulting from the announcement or pendency of the transactions
contemplated by this Agreement.
(c)    Authorization; Enforcement. Except for the need to obtain Shareholder
Approval, Victory has the requisite corporate and other power and authority to
enter into and to consummate the transactions contemplated by this Agreement and
each of the Closing Documents and otherwise to carry out its obligations
thereunder. The execution and delivery of this Agreement and each of the Closing
Documents by Victory and the consummation by it of the transactions contemplated
thereby have been duly authorized by all necessary action on the part of Victory
other than the need to obtain Shareholder Approval, and, except for obtaining
Shareholder Approval, no further action is required by Victory or any Subsidiary
in connection herewith or therewith. Each of this Agreement and each Closing
Document has been (or upon delivery will have been) duly executed by Victory
and, when delivered in accordance with its terms, will constitute the valid and
binding obligation of Victory, enforceable against Victory in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors’ rights and
remedies or by other equitable principles of general application.
(d)    No Conflicts. The execution, delivery and performance of this Agreement
and each of the Closing Documents by Victory and the consummation by Victory of
the transactions contemplated hereby and thereby do not and will not (i)
conflict with or violate any provision of

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Victory’s or any Subsidiary’s certificate or articles of incorporation, bylaws
or other organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any material agreement, credit facility, debt or other instrument
(evidencing a Victory or Subsidiary debt or otherwise) or other understanding to
which Victory or any Subsidiary is a party or by which any property or asset of
Victory or a Subsidiary is bound or affected, or (iii) result in a material
violation of any Legal Requirement, order, judgment, injunction, decree or other
restriction of any Governmental Body to which Victory or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any
property or asset of Victory or a Subsidiary is bound or affected. For purposes
of this Agreement, “Governmental Body” means any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental or administrative division, department,
agency, SEC, instrumentality, official, organization, unit, body or entity) and
any court or other tribunal; and “Legal Requirement” means any federal state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body (or under the
authority of any national securities exchange upon which the Common Stock is
then listed or traded). Reference to any Legal Requirement means such Legal
Requirement as amended, modified, codified, replaced or reenacted, in whole or
in part, and in effect from time to time, and reference to any section or other
provision of any Legal Requirement means that provision of such Legal
Requirement from time to time in effect and constituting the substantive
amendment, modification, codification, replacement or reenactment of such
section or other provision.
(e)    Filings, Consents and Approvals. Neither Victory nor any Subsidiary is
required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any Governmental Body or
other Person in connection with the execution, delivery and performance by
Victory of the this Agreement and Closing Documents, other than (i) the filing
with the SEC of the Proxy Statement, current reports on Form 8-K relating to the
execution of this Agreement and the Closing Documents and the Closing, (ii)
filings required by state securities laws, (iii) the filing of a Notice of Sale
of Securities on Form D with the SEC under Regulation D of the Securities Act of
1933, as amended (the “Securities Act”), (iv) those that have been made or
obtained prior to the date of this Agreement, and (v) other post-closing
securities filings or notifications required to be made under federal or state
securities laws.
(f)    Issuance of the Armacor Note and the Series B Shares. The Armacor Note
and the Series B Preferred Shares are duly authorized and, when issued and paid
for in accordance with this Agreement and the Closing Documents, will each be
duly and validly issued, fully paid and nonassessable, free and clear of all
Liens. Upon obtaining Shareholder Approval Victory will have sufficient
authorized common stock to allow for the conversion of the Series B Shares.

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(g)    Capitalization.
1.    Section 4(g) of the Disclosure Schedule sets forth as of the date hereof
(a) the authorized capital stock of Victory; (b) the number and class of shares
of capital stock issued and outstanding; (c) the number and class of shares of
capital stock issuable pursuant to Victory’s stock incentive plans or
agreements; and (d) the number and class of shares of capital stock issuable and
reserved for issuance pursuant to securities (other than the Armacor Note and
the Series B Shares) exercisable for, or convertible into or exchangeable for
any shares of capital stock of Victory.
2.    All of the issued and outstanding shares of Victory’s capital stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of pre-emptive rights and were issued in full compliance with applicable
state and federal securities law and any rights of third parties.
3.    No Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Closing Documents.
4.    Except as set forth in Section 4(g) of the Disclosure Schedule, there are
no outstanding (i) shares of capital stock or voting securities of Victory or
(ii) options, warrants, script rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock or voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of Victory, or contracts, commitments, understandings or arrangements
by which Victory or any Subsidiary is or may become bound to issue additional
shares of capital stock or voting securities of Victory, or securities or rights
convertible or exchangeable into shares of Common Stock or voting securities of
Victory (the items in clauses (i) and (ii) being referred to collectively as the
“Victory Securities”). There are no outstanding obligations of Victory or any
Subsidiary to repurchase, redeem or otherwise acquire any Victory Securities.
5.    The issuance and sale of the Armacor Note and the Series B Shares will not
obligate Victory to issue shares of Common Stock or other securities to any
Person (other than Armacor) and will not result in a right of any holder of
Victory Securities to adjust the exercise, conversion, exchange or reset price
under such securities.
6.    Except as set forth in Section 4(g) of the Disclosure Schedule, there are
no voting agreements, buy-sell agreements, option or right of first purchase
agreements or other agreements of any kind among Victory and any of the
securityholders of Victory relating to the securities of Victory held by them.
7.    Except as set forth in Section 4(g) of the Disclosure Schedule, no Person
has the right to require Victory to register any securities of Victory under the
Securities Act, whether on a demand basis or in connection with the registration
of securities of Victory for its own account or for the account of any other
Person.

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(h)    SEC Reports; Financial Statements.
(i)    Victory has filed all reports, schedules, forms, statements and other
documents and registration statements required to be filed by it under the
Securities Act and the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for the twelve months preceding the date hereof (or such shorter
period as Victory was required by law to file such reports) (the foregoing
materials being collectively referred to herein as the “SEC Reports” and,
together with the Disclosure Schedule, the “Disclosure Materials”) on a timely
basis or has timely filed and received a valid extension of such time of filing
and has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the SEC promulgated thereunder, and none of
the SEC Reports, when filed, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of Victory and
each Subsidiary included in the SEC Reports complied in all material respects
with applicable accounting requirements and the rules and regulations of the SEC
with respect thereto as in effect at the time of filing. Such financial
statements have been prepared in accordance with GAAP, and fairly present in all
material respects the financial position of Victory and its consolidated
Subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial year-end audit adjustments. There is no
transaction, arrangement, or other relationship between Victory or any
Subsidiary and an unconsolidated or other off balance sheet entity that is not
disclosed in its financial statements that should be disclosed in accordance
with GAAP.
(ii)    Victory and each of its Subsidiaries maintains internal control over
financial reporting (as such term is defined in Rule 13a-15(f) under the
Exchange Act) that is effective to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with GAAP, including that (i) transactions
are executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset and liability
accountability, (iii) access to assets or incurrence of liabilities is permitted
only in accordance with management’s general or specific authorization and (iv)
the recorded accountability for assets and liabilities is compared with the
existing assets and liabilities at reasonable intervals and appropriate action
is taken with respect to any difference. Victory maintains disclosure controls
and procedures (as such term is defined in Rule 13a-15(e) under the 1934 Act)
that are effective in ensuring that information required to be disclosed by
Victory in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the rules and forms of the SEC. Except as otherwise disclosed in the SEC
Reports, neither Victory nor any of its Subsidiaries has received any notice or
correspondence from any accountant, Governmental Body, or other Person relating
to any potential material weakness or significant deficiency in any part of the
internal controls over financial reporting of Victory or any of its
Subsidiaries.

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(iii)    There is no transaction, arrangement, or other relationship between
Victory or any of its Subsidiaries and an unconsolidated or other off balance
sheet entity that is required to be disclosed by Victory in its Exchange Act
filings and is not so disclosed.
(iv)    Except as otherwise disclosed in this Agreement or the Disclosure
Materials, there are no material disagreements of any kind presently existing,
or reasonably anticipated by Victory arise, between Victory and the accountants
and lawyers formerly or presently employed or engaged by Victory, and Victory is
current with respect to any fees owed to its accountants and lawyers which could
affect Victory’s ability to perform any of its obligations under any of the
Closing Documents. In addition, on or prior to the date hereof, Victory had
discussions with its accountants about its financial statements previously filed
with the SEC. Based on those discussions, Victory has no reason to believe that
it will need to restate any such financial statements or any part thereof.
(i)    Material Changes. Except as described in Section 4(i) of the Disclosure
Schedule or in the SEC Reports, since the date of the latest audited financial
statements included within the SEC Reports:
(i)    There has been no event or circumstance of any nature whatsoever that has
resulted in, or could reasonably be expected to result in, a Material Adverse
Effect; or
(ii)    Except for this Agreement and the other Closing Documents, there has
been no transaction, event, action, development, payment, or other matter of any
nature whatsoever entered into by Victory that requires disclosure in an SEC
Report which has not been so disclosed.
(j)    Litigation. There are no pending or, or to the Knowledge of Victory,
threatened Actions against Victory or its Subsidiaries or by which its or their
assets may be bound except as specifically disclosed in the SEC Reports or in
the Disclosure Schedule. Neither Victory nor any Subsidiary, nor to Victory’s
Knowledge, any director or officer thereof (in his or her capacity as such), is
or has been the subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of breach of
fiduciary duty, except as disclosed in the Disclosure Materials. There has not
been, and to Victory’s Knowledge, there is not pending or contemplated any
investigation by the SEC involving Victory or any current or former director or
officer of Victory (in his or her capacity as such). The SEC has not issued any
stop order or other order suspending the effectiveness of any registration
statement filed by Victory or any Subsidiary under the Exchange Act or the
Securities Act. For purposes of this Agreement, “Action” as to any Person, means
any action, suit, inquiry, notice of violation, proceeding (including any
partial proceeding such as a deposition) or investigation pending or threatened
in writing against or affecting such Person, any of such Person’s Subsidiaries
or any of such Person’s or such Subsidiaries’ respective properties, before or
by any Governmental Body, arbitrator, regulatory authority (federal, state,
county, local or foreign), stock market, stock exchange or trading facility.
(k)    Compliance. Neither Victory nor any Subsidiary (i) is in default under or
in violation of (and no event has occurred that has not been waived that, with
notice or lapse of time or both, would result in a default by Victory or any
Subsidiary under), nor has Victory or any Subsidiary received notice of a claim
that it is in default under or that it is in violation of any indenture, loan

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or credit agreement or any other material agreement or instrument to which it is
a party or by which it or any of its properties is bound (whether or not such
default or violation has been waived), (ii) is in violation of any order of any
court, arbitrator or Governmental Body, or (iii) is or has been in material
violation of any statute, rule or regulation of any governmental authority,
including without limitation all foreign, federal, state and local laws relating
to taxes, environmental protection, occupational health and safety, product
quality and safety and employment and labor matters. Victory is in compliance
with all effective requirements of the Sarbanes-Oxley Act of 2002, as amended,
and the rules and regulations thereunder, that are applicable to it.
(l)    Taxes. Victory has timely and properly filed all tax returns required to
be filed by it for all years and periods (and portions thereof) for which any
such tax returns were due. All such filed tax returns are accurate in all
material respects. Victory has timely paid all taxes due and payable (whether or
not shown on filed tax returns). There are no pending assessments, asserted
deficiencies or claims for additional taxes that have not been paid. There have
been no audits or examinations of any tax returns by any Governmental Body, and
Victory has not received any notice that such audit or examination is pending or
contemplated. No claim has been made by any Governmental Body in a jurisdiction
where Victory does not file tax returns that it is or may be subject to taxation
by that jurisdiction. To the Knowledge of Victory, no state of facts exists or
has existed which would constitute grounds for the assessment of any penalty or
any further tax liability beyond that shown on the respective tax returns. There
are no outstanding agreements or waivers extending the statutory period of
limitation for the assessment or collection of any tax.
(m)    Certain Fees. No brokerage or finder’s fees or commissions are or will be
payable by Victory to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by this Agreement.
(n)    Investment Company Status. Victory is not, and upon consummation of the
Closing will not be, an “investment company,” an affiliate of an “investment
company,” a company controlled by an “investment company” or an “affiliated
person” of, or “promoter” or “principal underwriter” for, an “investment
company” as such terms are defined in the Investment Company Act of 1940, as
amended.
5.    REPRESENTATIONS AND WARRANTIES OF ARMACOR. Except as set forth on the
Disclosure Schedule, Armacor represents and warrants to Victory that the
statements contained in this Section 5 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section 5).
(a)    Organization and Qualification. Armacor is duly formed or otherwise
organized, validly existing and in good standing under the laws of State of
Delaware, with the requisite power and authority to own and use its properties
and assets and to carry on its business as currently conducted. Armacor is not
in violation of any of the provisions of its certificate of formation or
operating agreement or other organizational or charter documents. Armacor is
duly qualified to conduct its businesses and is in good standing in each
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not, individually or in
the aggregate,

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have or reasonably be expected to result in an Armacor Material Adverse Effect.
For purposes of this Agreement, “Armacor Material Adverse Effect” has the same
meaning as Material Adverse Effect except that references to Victory are
replaced with Armacor.
(b)    Authorization; Enforcement. Armacor has the requisite corporate and other
power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the Closing Documents and otherwise
to carry out its obligations thereunder. The execution and delivery of this
Agreement and each of the Closing Documents by Armacor and the consummation by
it of the transactions contemplated thereby have been duly authorized by all
necessary action on the part of Armacor, no further action is required by
Armacor in connection herewith or therewith. Each of this Agreement and each
Closing Document has been (or upon delivery will have been) duly executed by
Armacor and, when delivered in accordance with its terms, will constitute the
valid and binding obligation of Armacor, enforceable against Armacor in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general application.
(c)    No Conflicts. The execution, delivery and performance of this Agreement
and each of the Closing Documents by Armacor and the consummation by Armacor of
the transactions contemplated hereby and thereby do not and will not (i)
conflict with or violate any provision of Armacor’s certificate of formation,
operating agreement or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any material agreement, credit facility, debt or
other instrument (evidencing an Armacor debt or otherwise) or other
understanding to which Armacor is a party or by which any property or asset of
Armacor is bound or affected, or (iii) result in a material violation of any
Legal Requirement, order, judgment, injunction, decree or other restriction of
any Governmental Body to which Armacor is subject (including federal and state
securities laws and regulations), or by which any property or asset of Armacor
is bound or affected.
(d)    Filings, Consents and Approvals. Armacor is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any Governmental Body or other Person in connection
with the execution, delivery and performance by Armacor of the this Agreement
and Closing Documents, other than those that have been made or obtained prior to
the date of this Agreement.
(e)    The License. Armacor has a valid license to all patents, patent
applications and other intellectual property (collectively, the “Intellectual
Property Rights”) that are necessary or material to grant to Victory the License
in connection with the intended use thereof in the Oilfield Services Business.
At the time that the License is granted to Victory, it shall not be subject to
any Lien. Armacor has not received a written notice that the Intellectual
Property Rights used by Armacor that will be licensed to Victory under the
License violates or infringes upon the rights of any Person. To Armacor’s
knowledge, all such Intellectual Property Rights are enforceable and there is no

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existing infringement by another Person of any of the Intellectual Property
Rights. For purposes hereof, the term “Oilfield Services Business” means
services to the petroleum exploration and production industry and includes, but
is not limited to, the following services and any associated products or
services to the extent offered or sold in such industry: artificial lift, casing
and tubing services, coiled tubing services, completion equipment and services,
contract compression services, directional drilling services, downhole drilling
tools, drill bits, drilling and completion fluids, floating production services,
geophysical equipment and services, hydraulic fracturing, inspection and
coating, land contract drilling, offshore construction services, offshore
contract drilling, oil country tubular goods, petroleum aviation, production
testing, rental and fishing services, rig equipment, solids control and waste
management, specialty chemicals, subsea equipment, supply vessels, surface data
logging, surface equipment, unit manufacturing, and well servicing, wireline
logging.
6.    ADDITIONAL COVENANTS OF THE PARTIES.
(a)    Commercially Reasonable Efforts. Each Party shall use commercially
reasonable efforts to timely satisfy each of the conditions to be satisfied by
it as provided in Sections 8 and 9 below. No party shall intentionally perform
or fail to perform any act that, if performed or omitted to be performed, would
prevent or excuse the performance of this Agreement or any of the transactions
contemplated hereby.
(b)    Consents. Each Party will use its commercially reasonable efforts to
obtain any required third-party consents to the transactions contemplated by
this Agreement and the other transactions contemplated by the Closing Documents.
(c)    Operation of the Company’s Business. During the period commencing on the
date hereof and ending upon the sooner of the date that this Agreement is
terminated in accordance with the terms hereof or the date that Shareholder
Approval is obtained, Victory, except (i) as otherwise expressly permitted by
this Agreement or any of the Closing Documents, (ii) as required by applicable
law or (iii) with the prior written consent of Armacor (which consent will not
be unreasonably withheld, conditioned or delayed), will carry on its business
only in the ordinary course of business in a manner consistent with past
practice and not take any action or enter into any transaction that would result
in the following:
(i)    any change in the certificate of incorporation or bylaws of Victory or
any amendment of any material term of any outstanding security of Victory;
(ii)    any issuance or sale of any additional shares of, or rights of any kind
to acquire any shares of, any capital stock of any class of Victory (whether
through the issuance or granting of options or otherwise) except for (i) the
issuance of additional shares of Victory Common Stock upon the conversion of the
VPEG Note in accordance with its terms, or (ii) the issuance of additional
shares of Victory Common Stock upon the exercise of options or warrants of
Victory that are outstanding as of the Closing in accordance with the terms of
such options or warrants;

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(iii)    any incurrence, guarantee or assumption by Victory or any Subsidiary of
any indebtedness for borrowed money or any other liability, other than in the
ordinary course of business in amounts and on terms consistent with past
practice;
(iv)    except in the ordinary course of business, any acquisition or
disposition of any business or any material property or asset of, or equity or
other interest in, any Person (whether by merger, consolidation or otherwise) by
Victory;
(v)    directly or indirectly pay any dividends or distributions;
(vi)    materially change the nature of its business or commence any new
business, except as specifically contemplated by this Agreement;
(vii)    enter into any transaction with an affiliate of Victory or enter into
any transaction or contract involving payments by Victory and its subsidiaries
of more than $50,000 in the aggregate; or
(viii)    any entry into any agreement or commitment to do any of the foregoing.
(d)    Access. Each Party will permit the other Party and its representatives to
have reasonable access at all reasonable times during normal business, and in a
manner so as not to interfere with the normal business operations of the other
Party, to the premises, properties, personnel, books, records contracts and
documents of or pertaining to the other Party.
(e)    Taking of Necessary Action; Further Action. Subject to the terms and
conditions of this Agreement, each of the Parties will take all such reasonable
and lawful action as may be necessary or appropriate in order to effectuate the
transactions contemplated by this Agreement and the Closing Documents as
promptly as practicable.
(f)    Board of Directors of Victory. At the Closing the board of directors of
Victory (the “Board”) shall be increased to six (6) people. At or prior to the
Closing, David McCall and Patrick Barry shall resign from the Board and Rick
Salas, Kevin DeLeon and Julio C. Herrera shall be appointed to fill the
vacancies on the Board resulting from such resignations and increase in size of
the Board. Prior to the Shareholder Meeting, Victory shall increase the Board to
seven (7) people. Victory shall include in the Proxy Statement a proposal for
the election of directors that includes the election of four (4) of the members
of the Board who will be designated by Armacor, who shall be Rick Salas, Kevin
DeLeon, Julio C. Herrera and a fourth designee to be determined by Armacor at a
later date. Until the next annual meeting of shareholders of Victory following
the date that Shareholder Approval is obtained, the Board shall remain at seven
(7) persons and Navitus Energy Group (“Navitus”) shall have the right to appoint
three (3) members to the Board, who shall initially be Dr. Ronald Zamber, Robert
Grenley and Kenneth Hill.
(g)    SEC Filings; Listing. Victory shall timely file all reports required to
be filed with the SEC pursuant to the Exchange Act, and Victory shall not
terminate its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would no
longer require or otherwise permit such termination. Victory shall maintain

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its common stock’s listing or authorization for quotation (as the case may be)
on the OTCQB and shall not take any action which would be reasonably expected to
result in the delisting or suspension of the common stock on the OTCQB.
7.    CLOSING.
(a)    Closing. The consummation of the transactions contemplated by this
Agreement and the Closing Documents (the “Closing”) will take place by the
reciprocal delivery of closing documents by electronic mail, regular mail, fax
or any other means mutually agreed upon by the Parties on a date that is no
later than two business days immediately following the day on which the last of
the conditions to closing contained in Sections 8 and 9 (other than any
conditions that by their nature are to be satisfied at the Closing) are
satisfied or waived in accordance with this Agreement or at such other location
or on such other date as the Parties may mutually determine (the date on which
the Closing actually occurs is referred to as the “Closing Date”).
(b)    Transactions to be Effected at the Closing.
(i)    At the Closing, Victory will (A) issue certificates representing the
Series B Shares in the name of Armacor and (B) deliver to Armacor all other
documents, instruments or certificates required to be delivered by Victory at or
prior to the Closing pursuant to this Agreement. The certificates representing
the Series B Shares shall contain customary securities legends referring to the
restrictions on transfer applicable to the Series B Shares and the Armacor Note
under federal and state securities laws.
(ii)    At the Closing, Armacor will execute and deliver to Victory all
documents, instruments or certificates required to be delivered by Armacor at or
prior to the Closing pursuant to this Agreement.
8.    CONDITIONS TO ARMACOR’ OBLIGATIONS. The obligation of Armacor to perform
its obligations hereunder is subject to the satisfaction, on or before the
Closing Date, of each of the following conditions; provided, however, that these
conditions are for Armacor’ benefit and may be waived in writing by Armacor at
any time in its sole discretion:
(a)    Execution and Delivery of Documents. Victory and each other individual or
entity (other than Armacor) who is required to execute the Closing Documents
shall have (i) executed each of the Closing Documents to the extent required
hereby or thereby and (ii) delivered such documents or signature pages thereof,
together with such other items as may be required by this Agreement, to Armacor.
(b)    Accuracy and Performance. The representations and warranties of Victory
herein shall be true and correct in all material respects as of the date made
and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date and except that
representations and warranties of Victory that are qualified by materiality
shall be true and correct in all respects), and Victory shall have performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by Victory at or prior to the Closing Date. Armacor will have

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received a certificate signed on behalf of Victory by a duly authorized officer
of Victory to such effect.
(c)    No Restrictions or Prohibitions. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered or issued
by any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which restricts or prohibits the consummation of any of the transactions
contemplated herein.
(d)    Divestiture Agreement. Victory and Navitus shall have entered into a
divestiture agreement in the form of Exhibit G (the “Divestiture Agreement”)
pursuant to which Victory will divest its 50% ownership interest in Aurora
Energy Partners through the sale of such interest to Navitus; provided, however,
that it is understood that the consummation of the transactions consummated by
the Divestiture Agreement shall not occur until Shareholder Approval has been
obtained.
(e)    Conversion of VPEG Debt. All obligations of Victory to Visionary Private
Equity Group I, LP (“VPEG”) to repay indebtedness for borrowed money, which
totals $873,409.64 (including all accrued, but unpaid, interest thereon), but
not including the VPEG Loan (the “VPEG Debt”), shall have been converted into
Series C Preferred Stock of Victory having the rights, privileges, and
limitations set forth in Exhibit A to the VPEG Settlement Agreement (the “Series
C Preferred Stock”) pursuant to and in accordance with the settlement agreement
and mutual release that will have been entered into between VPEG and Victory,
which will be in the form of Exhibit H to this Agreement (the “VPEG Settlement
Agreement”).
(f)    Conversion of McCall Debt. All obligations of Victory to David McCall and
the McCall Law Firm (“McCall”) to repay indebtedness for borrowed money, which
totals $380,323 (including all accrued, but unpaid, interest thereon) (the
“McCall Debt”), shall have been converted into Series D Preferred Stock of
Victory having the rights, privileges, and limitations set forth in Exhibit A to
the McCall Settlement Agreement (the “Series D Preferred Stock”) pursuant to and
in accordance with the settlement agreement and mutual release that will have
been entered into between McCall and Victory, which will be in the form of
Exhibit I to this Agreement (the “McCall Settlement Agreement”).
(g)    Conversion of Navitus Debt. All obligations of Victory to Ron Zamber and
Greg Johnson, affiliates of Navitus, which is referenced on the books and
records of Victory as Navitus indebtedness, to repay indebtedness for borrowed
money, which totals $520,800 (including all accrued, but unpaid, interest
thereon) (the “Navitus Debt”), shall have been converted into Series C Preferred
Stock pursuant to and in accordance with the settlement agreement and mutual
release that will have been entered into between Ron Zamber, Greg Johnson and
Victory, which will be in the form of Exhibit J to this Agreement (the “Navitus
Settlement Agreement”).
(h)    Conversion of Insider Debt. All obligations of Victory to Ron Zamber and
Kim Rubin Hill to repay indebtedness for borrowed money, which totals $35,000
(including all accrued, but unpaid, interest thereon) (the “Insider Debt”),
shall have been converted into Series C Preferred Stock pursuant to and in
accordance with the settlement agreement and mutual release that will

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have been entered into between Ron Zamber, Kim Rubin Hill and Victory, which
will be in the form of Exhibit K to this Agreement (the “Insider Settlement
Agreement”).
(i)    Agreements with Creditors. Victory shall have entered into agreements
with its creditors that are reasonably satisfactory to Armacor that relate to
the orderly repayment of all liabilities owed to Victory creditors.
(j)    Lock Up Agreement. Armacor, and each other recipient of Victory preferred
stock at the Closing shall have entered into a lock-up and resale restriction
agreement in the form of Exhibit L (the “Lock Up Agreement”) relating to the
VYEY stock received in connection with the transactions contemplated hereby.
(k)    Hill Employment Agreement. Victory and Kenneth Hill, the Chief Executive
Officer of Victory, shall have entered into an amended and restated employment
agreement in the form of Exhibit M (the “Employment Agreement”).
(l)    Due Diligence. Armacor shall have completed its business, accounting and
legal due diligence review of Victory, its assets and liabilities, and the
results thereof shall be reasonably satisfactory to Armacor.
9.    CONDITIONS TO VICTORY’S OBLIGATIONS. The obligation of Victory to make the
Loan is subject to the satisfaction, on or before the Closing Date, of each of
the following conditions; provided, however, that these conditions are for the
sole benefit of Victory and may be waived by Victory at any time in its sole
discretion:
(a)    Execution and Delivery of Documents. Armacor and each other individual or
entity (other than Victory) who is required to execute the Closing Documents
shall have (i) executed each of the Closing Documents to the extent required
hereby or thereby and (ii) delivered such documents or signature pages thereof,
together with such other items as may be required by this Agreement, to Victory.
(b)    Accuracy and Performance. The representations and warranties of Armacor
herein shall be true and correct in all material respects as of the date made
and as of Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date and except that representations
and warranties of Armacor that are qualified by materiality shall be true and
correct in all respects), and Armacor shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by them
at or prior to the Closing Date, including obtaining all consents and approvals
required for them to enter into and consummate the Closing Documents. Victory
will have received a certificate signed on behalf of Armacor by a duly
authorized officer of Armacor to such effect.
(c)    No Restrictions or Prohibitions. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered, or issued
by any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the

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matters contemplated hereby which restricts or prohibits the consummation of any
of the transactions contemplated herein.
(d)    Divestiture Agreement. Victory and Navitus Energy Group shall have
entered into the Divestiture Agreement; provided, however, that it is understood
that the consummation of the transactions consummated by the Divestiture
Agreement shall not occur until Shareholder Approval has been obtained.
(e)    Conversion of VPEG Debt. The VPEG Debt shall have been converted into
Series C Preferred Stock pursuant to the VPEG Settlement Agreement.
(f)    Conversion of McCall Debt. The McCall Debt shall have been converted into
Series D Preferred Stock pursuant to the McCall Settlement Agreement.
(g)    Conversion of Navitus Debt. The Navitus Debt shall have been converted
into Series C Preferred Stock pursuant to the Navitus Settlement Agreement.
(h)    Conversion of Insider Debt. The Insider Debt shall have been converted
into Series C Preferred Stock pursuant to the Insider Settlement Agreement.
(i)    Lock Up Agreement. Armacor and each other recipient of Victory preferred
stock at the Closing shall have entered into the Lock Up Agreement relating to
the VYEY stock received in connection with the transactions contemplated hereby
that is mutually agreeable to the Parties and contains a leak out provision
permitting the parties thereto to sell up to 5% of the Victory stock received in
connection with the transactions contemplated hereby and by the Closing
Documents per month beginning upon the date that Shareholder Approval is
obtained.
(j)    Hill Employment Agreement. Victory and Kenneth Hill, the Chief Executive
Officer of Victory, shall have entered into the Employment Agreement.
(k)    Non-Competition Agreements. Victory, Armacor and Armacor’s corporate
affiliates, including LM Group Holdings, LLC and its subsidiaries, if any, will
enter into non-competition and non-solicitation agreements in the form of
Exhibit N (the “Non-Competition Agreements”) that restrict Armacor and its
corporate affiliates from engaging in the Oilfield Services Business during the
term of the License, except through Victory.
(l)    Due Diligence. Victory shall have completed its business, accounting and
legal due diligence review of Armacor and the technology to be licensed under
the License, its assets and liabilities, and the results thereof shall be
reasonably satisfactory to Victory.
10.    GOVERNING LAW; MISCELLANEOUS.
(a)    Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the state of Texas without regard to the principles
of conflict of laws. The Parties hereby consent to the nonexclusive jurisdiction
of any state or federal court situated in Travis county, Texas, and waive any
objection based on forum non conveniens, with regard to any actions, claims,
disputes or proceedings relating to this Agreement or any transactions arising
herefrom, or

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enforcement and/or interpretation of any of the foregoing. Nothing herein will
affect a Party’s right to serve process in any manner permitted by law, or limit
a Party’s right to bring proceedings against another Party in the competent
courts of any other jurisdiction or jurisdictions.
(b)    Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Counterparts may be delivered via
facsimile, electronic mail (including pdf or any electronic signature complying
with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other
transmission method and any counterpart so delivered shall be deemed to have
been duly and validly delivered and be valid and effective for all purposes.
(c)    Headings; Interpretation. The headings of this Agreement are for
convenience of reference and shall not form a part of, or affect the
interpretation of, this Agreement. As used herein, unless the context clearly
requires otherwise, the words “herein,” “hereunder” and “hereby” shall refer to
the entire Agreement and not only to the Section or paragraph in which such word
appears. If any date specified herein falls upon a Saturday, Sunday or legal
holiday in the state of Texas, the date shall be construed to mean the next
business day following such Saturday, Sunday or legal holiday. For purposes of
this Agreement, a “business day” is any day other than a Saturday, Sunday or
legal holiday in the state of Texas. Each Party intends that this Agreement be
deemed and construed to have been jointly prepared by the parties. As a result,
the parties agree that any uncertainty or ambiguity existing herein shall not be
interpreted against any of them.
(d)    Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
(e)    Entire Agreement; Amendments. This Agreement and the documents referenced
herein (which are incorporated herein by reference) contain the entire
understanding of the Parties with respect to the matters covered herein and
supersede all prior agreements, negotiations and understandings, written or
oral, with respect to such subject matter. Except as specifically set forth
herein, none of the Parties makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement shall
be waived or amended other than by an instrument in writing signed by each of
the Parties hereto. No delay or omission of any party hereto in exercising any
right or remedy hereunder shall constitute a waiver of such right or remedy, and
no waiver as to any obligation shall operate as a continuing waiver or as a
waiver of any subsequent breach.
(f)    Notices. Any notices required or permitted to be given under the terms of
this Agreement shall be in writing and sent by U. S. Mail or delivered
personally or by overnight courier or via facsimile or e-mail (if via facsimile
or e-mail, to be followed within one (1) business day by an original of the
notice document via overnight courier) and shall be effective (i) five (5)
business days after being placed in the mail, if sent by registered mail, return
receipt requested, (ii) upon receipt, if delivered personally, (iii) upon
delivery by facsimile or e-mail (if received between 8:00 a.m. and 5:00 p.m. CT;
otherwise delivery shall be considered effective the following business day) or
(iv) one (1) business day after delivery to a courier service for overnight
delivery, in each case

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properly addressed to the party to receive the same. The addresses for such
communications shall be as specified on the signature page hereto. Each party
shall provide written notice to the other parties of any change in address.
(g)    Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and permitted
assigns; provided, however, that no Party may assign its rights hereunder or
delegate its duties hereunder without the prior written consent of the other
Parties hereto.
(h)    No Third Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective successors and permitted assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other individual or entity; provided, however, that Navitus is an intended third
party beneficiary of the rights provided to it in Section 6(f) of this
Agreement.
(i)    Survival. The representations, warranties and agreements of the Parties
shall survive the Closing for a period of eighteen (18) months.
(j)    Remedies. No provision of this Agreement providing for any specific
remedy to a Party shall be construed to limit such Party to that specific
remedy, and any other remedy that would otherwise be available to such Party at
law or in equity shall also be available. The Parties also intend that the
rights and remedies hereunder be cumulative, so that exercise of any one or more
of such rights or remedies shall not preclude the later or concurrent exercise
of any other rights or remedies. In addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, each of
the Parties will be entitled to specific performance under this Agreement. The
Parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agree to waive in any action for specific performance of any
such obligation the defense that a remedy at law would be adequate.
(k)    Expenses. Except as otherwise provided in this Agreement, whether or not
the transactions contemplated hereby and by the Closing Documents are
consummated, all expenses incurred in connection with this Agreement, the
Closing Documents and the transactions contemplated hereby and thereby will be
paid by the party incurring such expenses. As used in this Agreement, “expenses”
means the out-of-pocket fees and expenses of the financial advisor, counsel and
accountants incurred in connection with this Agreement, the Closing Documents
and the transactions contemplated hereby and thereby.
(l)    Attorney’s Fees. If any Party to this Agreement shall bring any action
for relief against another arising out of or in connection with this Agreement,
in addition to all other remedies to which the prevailing Party may be entitled,
the losing Party shall be required to pay to the prevailing Party a reasonable
sum for attorney’s fees and costs incurred in bringing or defending such action
and/or enforcing any judgment granted therein, all of which shall be deemed to
have accrued upon the commencement of such action and shall be paid whether or
not such action is prosecuted to judgment. Any judgment or order entered in such
action shall contain a specific provision providing for the recovery of
attorney’s fees and costs incurred in enforcing such judgment.

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For the purposes of this Section, attorney’s fees shall include, without
limitation, fees incurred with respect to the following: (i) post-judgment
motions, (ii) contempt proceedings, (iii) garnishment, levy and debtor and third
party examinations, (iv) discovery, (v) bankruptcy litigation and (vi) any
appellate proceedings.
(m)    Waiver of Jury Trial. THE PARTIES EACH WAIVE, TO THE EXTENT PERMITTED BY
LAW, ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT.

[Signature page follows]

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the date and year first written above.

ARMACOR:

ARMACOR VICTORY VENTURES, LLC

By: /s/ Risk Salas    
Name: Rick Salas    
Title: President    

Address:    
    
    
Fax:    
Email:    

VICTORY:

VICTORY ENERGY CORPORATION

By: /s/ Kenneth Hill    
Name: Kenneth Hill    
Title: Chief Executive Officer

Address:    
    
    
Fax:     
Email:    

[Signature Page to Transaction Agreement]