--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 
 

 
PURCHASE AND SALE AGREEMENT
 
THIS AGREEMENT is dated July 16, 2010, between TRANS ENERGY, INC., Nevada
corporation (“TEI”), and PRIMA OIL COMPANY, INC., a Delaware corporation
(“Prima,” together with TEI, the “Seller”), and REPUBLIC ENERGY VENTURES, LLC, a
Delaware limited liability company (“Buyer”).  For value received, Seller and
Buyer agree as follows:
 
ARTICLE I
 
PURCHASE AND SALE
 
1.1. Purchase and Sale.  Subject to the terms of this Agreement, Seller agrees
to sell the Properties, as defined in Section 1.2 below, to Buyer and Buyer
agrees to purchase the Properties from Seller.
 
1.2. Properties.  The Properties are:
 
(a) the interests described on Exhibit A hereto and an undivided fifty percent
(50%) of any additional interest now owned by Seller or its Affiliates in all
oil, gas and mineral leases within the definition of “Eligible Leases” as
hereinafter defined and the fee mineral interests as described on Exhibit A
covering lands within either Marion County, West Virginia (the “Marion County
Leases”) or within Tyler County, West Virginia, but only to the extent such
leases covering lands within Tyler County, West Virginia, are held by production
existing on the Closing Date and excluding those leasehold rights pertaining to
the rights to operate or receive production from wellbores producing as of the
Closing Date (the “Tyler County Leases”), together with all other rights and
interests arising by operation of law or otherwise in connection with the
pooling, unitization or communitization of any of the oil, gas and mineral
leases described in this paragraph, and as such leases are described in  Exhibit
“A” attached hereto (the “Leases”);
 
(b) all overriding royalty interests previously reserved by Seller in
assignments of leasehold working interests made by Seller to Buyer pursuant to
the terms of that certain Farm-Out and Area of Joint Development Agreement
between Seller and Republic Partners VI, LP dated April 4, 2007, accepted May 2,
2007, as amended by First Amendment thereto dated May 12, 2009, by Second
Amendment thereto dated August 12, 2009, by letter agreement dated July 31,
2009, by Third Amendment thereto dated September 17, 2009, and Supplement to
Third Amendment dated April 14, 2010 (the “AJDA”), insofar as such reserved
overriding royalty interests burden the leasehold working interests so assigned
by Seller to Buyer (the “Retained ORRI’s”);
 
(c) to the extent assignable or transferable, equivalent interests in all
agreements and other rights relating to the Leases, including, without
limitation, those listed in Schedule 1.2(c) and any other of the
following:  production purchase or sale agreements; net profits agreements;
production processing, balancing, compression and transportation agreements;
farmout, dry hole, bottom hole, acreage contribution and
 

Purchase and Sale Agreement Page 1
 
884040v.13
 
 
 

--------------------------------------------------------------------------------

 

(d) operating agreements; area of mutual interest agreements; salt water
disposal agreements; unitization and pooling agreements; and claims and causes
of action arising after the Closing out of any of the items described in this
paragraph (“Contracts”);
 
(e) to the extent assignable or transferable, an undivided 50% of Seller’s
interest in all surface interests, rights-of-way, easements, leases, permits,
licenses and other similar rights and interests which are held or used in
connection with the Leases, including, without limitation, those listed in
Schedule 1.2(d) (“Surface Rights”); and
 
(f) copies of all of Seller’s data, records and information relating to the
Leases or the Retained ORRI’s, the transfer of which is not prohibited,
including, without limitation, geological, geophysical and engineering data and
interpretations; production records; land, legal, title and contract files; and
revenue, expense and other accounting records for the twelve month period
preceding Closing (“Data”).
 
Notwithstanding anything in this Section 1.2 or in the remainder of this
Agreement to the contrary, all existing or future easements, surface leases,
wellbores, sub-surface leases, equipment, facilities, gathering lines, roads and
structures on, over and through the Leases utilized to explore, exploit, market
and otherwise operate the wellbores producing as of the Closing Date are
reserved unto Seller for its sole use.
 
1.3. Definitions.  As used in this Agreement:
 
“AJDA” has the meaning specified in Section 1.2(b) above.
 
“AJDA Amendment” has the meaning specified in Section 8.1(e).
 
“Affiliate” means, with respect to any Person, any other Person which, directly
or indirectly, controls, is controlled by, or is under common control with such
Person.
 
“Agreement” has the meaning specified in the preamble hereof.
 
“Buyer” has the meaning specified in the preamble hereof.
 
“Buyer’s Title Review” has the meaning specified in Section 6.3.
 
“Closing” has the meaning specified in Section 2.1.
 
“Closing Date” has the meaning specified in Section 2.1.
 
“Code” means the Internal Revenue Code of 1986, as amended.
 
“Contract” has the meaning specified in Section 1.2(c) above.
 
“Conveyance” shall mean a Conveyance and Bill of Sale substantially of the form
set forth in Exhibit “B-1”.
 

Purchase and Sale Agreement Page 2
 
884040v.13

 
 
 

--------------------------------------------------------------------------------

 

“Cumulative Expenses” has the meaning specified in Section 3.3.
 
“Cumulative Revenues” has the meaning specified in Section 3.3.
 
“Defensible Title” means with respect to the Leases and the Retained ORRI’s,
such record title and ownership by Seller that:
 
(a) except as set forth on Schedule 4.6, entitles Seller to receive and retain,
without reduction, suspension or termination, not less than the percentage set
forth in Exhibit “A” as Seller’s “net revenue interest” or “CO NRI” of any
future Hydrocarbons produced, saved and marketed from each Lease as set forth in
Exhibit “A” through plugging, abandonment and salvage of all wells drilled
pursuant to such Lease, and except for changes or adjustments that result from
the establishment of units, changes in existing units (or the participating
areas therein), or the entry into pooling or unitization agreements after the
date hereof unless made in breach of the provisions of Section 6.2;
 
(b) obligates Seller to bear not greater than the percentage set forth in
Exhibit “A” as Seller’s “working interest” or “CO WI” of the costs and expenses
relating to the maintenance, development and operation of each Lease (including
the plugging and abandonment and site restoration with respect to all future
wells located thereon or attributable thereto), through plugging, abandonment
and salvage of all wells drilled pursuant to such Lease, and except for changes
or adjustments that result from the establishment of units, changes in existing
units (or the participating areas therein), or the entry into pooling or
unitization agreements after the date hereof unless made in breach of the
provisions of Section 6.2;
 
(c) is free and clear of all Liens, except Permitted Liens;
 
(d) reflects that all bonuses, royalties, rentals, Pugh clause payments, shut-in
gas payments and other payments due with respect to such Lease have been
properly and timely paid; and
 
(e) reflects that all consents to assignment, notices of assignment or
preferential purchase rights which are applicable to or must be complied with in
connection with the transaction contemplated by this Agreement, or any prior
sale, assignment or the transfer of such Lease or Retained ORRI’s, have been
obtained and complied with.
 
“Eligible Lease” means a Lease which:
 
(a) if not held by production, has a primary term which will not expire prior to
January 1, 2012, in the absence of further payments or operations to be paid or
performed by the lessee;
 
(b) does not restrict the lessee’s right to use the surface of the lands covered
by such Lease in a manner greater than the applicable common law would otherwise
restrict such rights;
 
 
 
Purchase and Sale Agreement Page 3
 
884040v.13

 
 
 

--------------------------------------------------------------------------------

 

(c) does not obligate the lessee to pay a royalty rate greater than 15.625 % of
production actually obtained;
 
(d) has a term extending for as long as oil or gas is produced in paying
quantities;
 
(e) contains customary pooling rights and the right to extend the Lease by
reworking, new drilling, shut-in royalties, or in the event of force majeure
conditions;
 
(f) imposes no obligations on the lessee for development or exploration beyond a
reasonable obligation to protect against drainage or a continuous drilling or
Pugh clause where acreage not within the spacing units for producing wells may
be subject to release if a reasonable drilling schedule beyond the primary term
is not maintained;
 
(g) does not restrict the lessee’s ability to assign the Lease; and
 
(h) is not a “top lease” and represents the first priority Lease granted by the
mineral owner lessor.
 
“Exercise Notice” has the meaning specified in Section 6.9.
 
 
“Excluded Records” means

 
 
(a)
all corporate, financial, Tax, and legal data and records of Seller that relate
to Seller’s business generally and are not predominantly related to the
Properties;

 
 
(b)
all geological, geophysical or seismic data, materials or information, including
maps, interpretations, records or other technical information related to or
based upon any such data, materials or information, and any other asset, data,
materials or information the transfer of which is restricted or prohibited under
the terms of any third party license, confidentiality agreement or other
agreement or the transfer of which would require the payment of a fee or other
consideration to any third party and Buyer has not agreed to pay the fee or
other consideration, as applicable;

 
 
(c)
all legal records and legal files of Seller that may be protected by
attorney-client privilege (exclusive of Leases, title opinions and Contracts in
respect of the Properties); and

 
 
(d)
all data and records directly relating to the sale of the Properties, including
without limitation, communications with advisors or representatives of Seller
and records of negotiations with third parties.

 

Purchase and Sale Agreement Page 4

884040v.13
 
 

--------------------------------------------------------------------------------

 

 
“Governmental Authority” means any federal, state, local or foreign government
or governmental regulatory body and any of their respective subdivisions,
agencies, instrumentalities, authorities, courts or tribunals.

 
“Hedging Transaction” means any futures, hedge, swap, collar, put, call, floor,
cap, option or other contract that is intended to benefit from, relate to or
reduce or eliminate the risk of fluctuations in the price of commodities,
including Hydrocarbons, interest rates, currencies or securities.
 
“Hydrocarbons” means oil, condensate, gas, casinghead gas and other liquid or
gaseous hydrocarbons.
 
“Indemnified Party” has the meaning specified in Section 10.2(a).
 
“Indemnifying Party” has the meaning specified in Section 10.2(a).
 
“Injunction” means a temporary restraining order, preliminary or permanent
injunction or other order issued by a court of competent jurisdiction, an order
of a Governmental Entity having jurisdiction over any party hereto, or any legal
restraint or prohibition.
 
“JOA” shall have the meaning specified in Section 3.2(b).
 
“Law” means any federal, state, local or foreign law, statute, rule, ordinance,
code or regulation.
 
“Leases” has the meaning specified in Section 1.2(a) above.
 
“Legal Proceeding” means any judicial, administrative or arbitral action, suit,
proceeding (public or private), litigation, investigation, complaint, claim or
governmental proceeding.
 
“Lien” means any lien, pledge, mortgage, deed of trust, security interest,
attachment, right of first refusal, option, easement, covenant, encroachment, or
any other adverse claim whatsoever.
 
“Litigation” shall mean the Legal Proceedings, Orders and Official Actions.
 
“Losses” has the meaning specified in Section 10.1(d).
 
“Marian County Leases” has the meaning specified in Section 1.2(a).
 
“Material Adverse Effect” shall mean:
 
(i) As to Buyer, any breach of Buyer’s representations and warranties, which
individually or in the aggregate would materially impair Buyer’s ability to
consummate the transactions contemplated by this Agreement or prevent the
consummation of any of the transactions contemplated hereby.
 

Purchase and Sale Agreement Page 5

884040v.13
 
 

--------------------------------------------------------------------------------

 

(j) As to Seller, any breach of Seller’s representations and warranties, which
individually or in the aggregate would materially impair Seller’s ability to
consummate the transactions contemplated by this Agreement or prevent the
consummation of any of the transactions contemplated hereby.
 
“Net Mineral Acres” shall mean the number of gross acres of minerals under a
tract multiplied by the percentage of minerals owned by Seller in said tract,
with “ownership” for such purposes understood to mean either a fee simple
absolute estate, or a fee simple determinable estate under a currently effective
oil, gas, and mineral lease.
 
“Net Profits” has the meaning specified in Section 3.3.
 
“Net Royalty Acres” means the number of gross acres subject to the Retained
ORRI’s multiplied by the weighted acreage net revenue percentage in such acreage
(computed on an 8/8th basis) represented by the Retained ORRI’s.
 
“Official Action” shall mean any domestic or foreign decision, order, writ,
injunction, decree, judgment, award or any determination, both as presently
existing and effective and as may become effective in the future, by any court,
administrative body, or other tribunal.
 
“Option,” “Option Assets,” “Option Closing,” and “Option Term” shall have the
meanings specified in Section 6.9.
 
“Order” means any order, judgment, Injunction, ruling, writ, award, decree,
statute, law, ordinance, rule or regulation.
 
“Override Conveyance” shall mean an Overriding Royalty Assignment substantially
of the form set forth in Exhibit B-2.
 
“Permit” means any permit, license, certificate (including a certificate of
occupancy) registration, authorization, application, filing, notice,
qualification, waiver of any of the foregoing or approval of a Governmental
Authority.
 
“Permitted Liens” means:  (i) Liens for Taxes that are not yet due and payable
or that are being contested in good faith by appropriate proceedings,
(ii) operators’ liens and statutory liens, for taxes, assessments, labor and
materials, where payment is not due (or that, if delinquent, are being contested
in good faith); (iii) operating agreements, unit agreements, unitization and
pooling designations and declarations, gathering and transportation agreements,
processing agreements, gas, oil and liquids purchase, sale and exchange
agreements and other contracts, agreements and installments that do not have a
Material Adverse Effect or unreasonably interfere with the operation of the
Properties; (iv) statutory or regulatory authority of governmental agencies;
(v) easements, surface leases and rights, plat restrictions, pipelines, grazing,
logging, canals, ditches, reservoirs, telephone lines, power lines, railways and
similar encumbrances that do not unreasonably interfere with the operation of
the Properties; (vi) liens, charges, encumbrances and irregularities in the
chain of title which, because of remoteness in or passage of time, statutory
cure periods, marketable title acts or other similar reasons, have not
materially affected or interrupted, and are not reasonably expected to
materially affect or interrupt, the
 

Purchase and Sale Agreement Page 6

884040v.13
 
 

--------------------------------------------------------------------------------

 

claimed ownership of the party or the receipt of production revenues from the
Properties affected thereby; and (vii) other liens set forth in Schedule 4.6.
 
“Person” means any natural person, corporation, partnership, limited liability
company, trust, unincorporated organization, Governmental Authority, or other
entity.
 
“Pooling Defect Lease” shall have the meaning specified in Section 6.3(c)(iii).
 
“Pooling Title Defect” shall have the meaning specified in Section 6.3(c)(iii).
 
“Purchase Price” has the meaning specified in Section 3.1.
 
“Related Contract” means that certain Purchase and Sale Agreement dated the same
date as this Agreement between Buyer and Sancho Oil and Gas Corporation.
 
“Retained ORRI’s” has the meaning specified in Section 1.2(b) above.
 
“Sancho Leases” means the oil, gas and mineral leases subject to the Related
Contract.
 
“Sancho Option Interest” has the meaning specified in Section 3.3.
 
“Schedule” means a disclosure schedule provided by Seller to Buyer pursuant to
this Agreement.
 
“Securities Act” means the Securities Act of 1933, as amended.
 
“Seller” has the meaning specified in the preamble hereof.
 
“Subsidiaries” means, with respect to any Person, each entity as to which such
Person (either alone or through or together with any other Subsidiary) (i) owns
beneficially or of record or has the power to vote or control, 50% or more of
the voting securities of such entity or of any class of equity interests of such
entity the holders of which are ordinarily entitled to vote for the election of
the members of the Board of Directors or other persons performing similar
functions, (ii) in the case of partnerships, serves as a general partner, (iii)
in the case of a limited liability company, serves as a managing member or owns
a majority of the equity interests or (iv) otherwise has the ability to elect a
majority of the directors, trustees or managing members thereof.
 
“Surface Rights” has the meaning specified in Section 1.2(d) above.
 
“Tax” or “Taxes” means all income, profits, franchise, gross receipts, capital,
sales, use, withholding, value added, ad valorem, transfer, employment, social
security, disability, occupation, asset, property, severance, documentary,
stamp, excise and other taxes, duties and similar governmental charges or
assessments imposed by or on behalf of any Governmental Authority and any
interest, fines, penalties or additions relating to any such tax, duty, charge
or assessment.
 

Purchase and Sale Agreement Page 7

884040v.13
 
 

--------------------------------------------------------------------------------

 

“Tax Return” means any return, report, information statement, or similar
statement required to be filed with respect to any Taxes (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return and declaration of estimated Tax.
 
“Title Defect Amount” has the meaning specified in Section 6.3(c).
 
“Title Defect Notice” has the meaning specified in Section 6.3(b).
 
“Title Defect Property” has the meaning specified in Section 6.3(b).
 
“Title Defect” has the meaning specified in Section 6.3.
 
“Title Objection Period” has the meaning specified in Section 6.3(b).
 
“Tyler County Leases” has the meaning specified in Section 1.2(a), subject to
modification as provided in Section 3.3 for the purposes expressed therein.
 
ARTICLE II
 
CLOSING
 
2.1. Closing.  The Closing of the transactions contemplated hereby (the
“Closing”) shall take place at the offices of Buyer at 10:00 a.m., Central Time,
on July 15, 2010, or such other place or date as the parties hereto may mutually
agree (the “Closing Date”).
 
2.2. Proceedings at Closing.  All proceedings to be taken and all documents to
be executed and delivered by all parties at the Closing shall be deemed to have
been taken and executed simultaneously, and no proceedings shall be deemed taken
nor any documents executed or delivered until all have been taken, executed and
delivered.
 
ARTICLE III
 
SALE AND PURCHASE CONSIDERATION
 
3.1. Amount of Consideration.  The total purchase price to be paid by Buyer to
Seller in consideration of the Properties (the “Purchase Price”) shall be the
sum of:
 
(a) The product of $5,500.00 times the number of full or partial Net Mineral
Acres leased by the Marion County Leases, proportionately reduced to the
interest in such Leases conveyed to Buyer at Closing, and subject to adjustment
as provided in Section 6.3.
 
(b) The product of $4,000.00 times the number of full or partial Net Mineral
Acres leased by the Tyler County Leases, proportionately reduced to the interest
in such Leases conveyed to Buyer at Closing and subject to adjustment as
provided in Section 6.3.
 

Purchase and Sale Agreement Page 8

884040v.13
 
 

--------------------------------------------------------------------------------

 

(c) The sum of $9,000,000.00, proportionately reduced on a Net Royalty Acre
basis to the extent that any portion of the Retained ORRI’s are subject to Title
Defects as provided in Section 6.3 hereunder.
 
For the purpose of the multiplication to be performed in the above calculations,
partial Net Mineral Acres shall be expressed as the decimal percentage of a full
Net Mineral Acre they represent.
 
3.2. Form of Consideration.
 
(a) The lesser of (a) the total amount of the Purchase Price or (b) Twenty-Three
Million Five Hundred Thousand Dollars ($23,500,000.00) shall be paid to Seller
at Closing in immediately available funds.
 
(b) To the extent that the Purchase Price exceeds the sum of Twenty-Three
Million Five Hundred Thousand Dollars ($23,500,000.00), Seller will be provided
with a credit in the amount of such excess toward future joint interest billings
to Seller pursuant to the Joint Operating Agreement referenced in paragraph 3 of
the AJDA (the “JOA”).  Such credit shall be applied dollar for dollar to offset
the next joint interest billings under the JOA until such credit is exhausted;
provided, however, that such credit may not be utilized for joint interest
billings with regard to the Whipkey 1H or Whipkey 2H Wells.
 
3.3. Additional Contingent Consideration.
 
As additional contingent consideration for the sale of the Properties, Buyer
shall pay over to Seller, if, as and when received, 20% of any “Net Profits”
(defined below) realized by Buyer or its Affiliates from the ownership,
production, operation, sale or disposition of the Tyler County Leases, including
for such purposes, the remaining 50% interest of Sancho Oil and Gas Corporation
(in addition to the 50% interest to be purchased by Buyer pursuant to the
Related Contract) in the Sancho Leases (the “Sancho Option Interest”, to the
extent that Seller purchases the Sancho Option Interest.  For purposes hereof,
“Net Profits” shall be defined as any excess of “Cumulative Revenues” over
“Cumulative Expenses.”  “Cumulative Revenues” shall be defined as all cash
revenues received by Buyer or its Affiliates from its ownership in the Tyler
County Leases, whether as production revenues, sales proceeds, or otherwise.
“Cumulative Expenses” shall mean the Purchase Price consideration paid by Buyer
hereunder for the Tyler County Leases plus the amount of all other cumulative
costs incurred by Buyer or its Affiliates in connection with the geological and
seismic evaluation, drilling, development, completion, operations or sale of the
Tyler County Leases.  In the event of a sale or other transfer of any of the
Tyler County Leases or interests therein by Buyer to a party which is
unaffiliated with Buyer in an arms-length transaction, such Net Profits interest
of Seller shall terminate as to that interest in the Tyler County Lease(s) so
sold or conveyed, but the cash consideration received by Buyer or its Affiliates
from such sale shall be included in the computation of “Cumulative Revenues” for
purposes hereof.  The obligation to pay contingent consideration pursuant to
this Section 3.3 shall survive the Closing.
 

Purchase and Sale Agreement Page 9

884040v.13
 
 

--------------------------------------------------------------------------------

 

Upon Seller’s acquisition of the Sancho Option Interest, Seller shall
automatically assume the remaining obligations of Sancho pursuant to Section 6.3
(except for the obligations arising under Section 6.3(c)(iii)) of the Related
Contract.
 
ARTICLE IV
 
REPRESENTATIONS AND WARRANTIES OF SELLER
 
Seller hereby represents and warrants to Buyer:
 
4.1. Organization and Good Standing.  Seller is duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is organized
and has all requisite power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby.  Seller is not a “foreign person” within the meaning of Section 1445 of
the Code.
 
4.2. Authorization of Agreement.  The execution and delivery of this Agreement
by Seller and the performance of the transactions contemplated herein by Seller
have been, or will be prior to Closing, duly authorized by all necessary action,
and no other action on the part of Seller is (or will be) necessary to authorize
this Agreement or consummate the transactions contemplated hereby.  This
Agreement has been duly and validly executed and delivered by Seller and
constitutes a valid and binding obligation of Seller and is enforceable against
Seller in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization and similar laws affecting
creditors generally and by the availability of equitable remedies.
 
4.3. Conflicts, Consents of Third Parties.  Neither the execution and delivery
by Seller of this Agreement nor consummation or performance by Seller of the
transactions contemplated hereby to be consummated or performed by Seller
will:  (a) violate any Law, (b) violate the certificate of organization or
bylaws of Seller, (c) violate any Order to which Seller is a party or by which
Seller is bound, (d) breach the provisions of any contract or agreement to which
Seller is a party, or (e) require any consent from, authorization or approval or
other action by, notice to or declaration, filing or registration with any
Governmental Authority except for governmental consents and approvals that are
customarily obtained after Closing.
 
4.4. Brokers.  Seller has not paid or become obligated to pay any fee or
commission to any broker, finder or intermediary in connection with the
transactions contemplated hereby for which the Buyer shall have any liability
following the Closing.
 
4.5. Litigation.  As of the date of this Agreement there is no suit, action or
proceeding pending, or, to the knowledge of Seller, threatened against or
affecting Seller or its interest in the Properties that is reasonably likely to
have a Material Adverse Effect on Seller or the transactions contemplated in
this Agreement, nor is there any judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding against Seller that is
reasonably likely to have a Material Adverse Effect on Seller.
 

Purchase and Sale Agreement Page 10

884040v.13
 
 

--------------------------------------------------------------------------------

 

4.6. Title to Properties.  Except as set forth in Schedule 4.6, Seller has
Defensible Title to the interests in the Leases and Retained ORRI’s set forth on
Exhibit A other than with respect to Title Defects that are dealt with pursuant
to Section 6.3.
 
4.7. Taxes and Assessments.  Seller has caused to be timely filed all material
Tax returns relating to the Properties the failure to pay which could result in
the placement of a Lien on all or a portion of the Properties.  Seller has paid
or caused to be paid all ad valorem, property, and similar Taxes, except those
being contested in good faith and disclosed to Buyer in writing.  Seller has not
received written notice of any pending claim against Seller from any applicable
taxing authority for assessment of Taxes with respect to the Properties.  There
are no audits of Seller by any applicable taxing authority with respect to Taxes
attributable to the Properties.  Except for statutory liens for property taxes
and ad valorem taxes, there are no tax liens on or with respect to the
Properties.
 
4.8. Compliance with Laws.  To the knowledge of Seller, Seller is in possession
of all material Permits necessary to own, lease and operate its Properties and
to carry on its business with respect to the Properties as it is now being
conducted, except where the failure to be in possession of any of the Permits
would not have a Material Adverse Effect and there is no action, proceeding or,
to the knowledge of Seller, investigation pending or threatened regarding
suspension or cancellation of any of the Permits.  Except as disclosed in
Schedule 4.8, Seller is not in conflict with, or in default or violation of, (a)
any Law to which any of the Properties is bound or subject or (b) any of the
Permits, except where such conflict, default or violation would not have a
Material Adverse Effect.
 
4.9. Forward Sales.  Seller is not obligated by virtue of a take or pay payment,
advance payment or other similar payment (other than royalties, overriding
royalties and similar arrangements reflected on Exhibit “A”), to deliver
Hydrocarbons, or proceeds from the sale thereof, attributable to the Leases at
some future time without receiving payment therefor at or after the time of
delivery.
 
4.10. Hydrocarbon Sales.
 
(a) Except for Hydrocarbon sales contracts with a term not greater than ninety
(90) days, no Hydrocarbons produced from the Properties are subject to a sales
contract or other agreement relating to the marketing of Hydrocarbons, and no
person has any call upon, option to purchase or similar rights with respect to
such Properties or the rights therefrom, except for third party operator rights
under operating agreements covering the Properties.
 
(b) With respect to the Properties, Seller has the ability and right to obtain
access to, produce, treat, transport, process, or otherwise market Hydrocarbons
from the Leases and Retained ORRI’s without the need for any additional
agreements.
 
4.11. Consents and Preferential Purchase Rights.  Except as listed on Schedule
4.11, none of the Leases or the Retained ORRI’s are subject to any preferential
rights to purchase or restrictions on assignment or required third-party
consents to assignment which may be
 

Purchase and Sale Agreement Page 11

884040v.13
 
 

--------------------------------------------------------------------------------

 

4.12. applicable to the transactions contemplated by this Agreement, except for
governmental consents and approvals of assignments that are customarily obtained
after Closing.
 
4.13. Contracts.  All Contracts affecting the Properties are listed on
Schedule 1.2(c) attached.  Neither Seller nor any other party is in default
under any Contract except for such defaults as would not have a Material Adverse
Effect.  There are no Contracts with Affiliates of Seller which will be binding
on the Properties after Closing.  None of the Contracts consist of, nor are the
Properties subject to any, Hedging Transaction which will be binding on Buyer.
 
ARTICLE V
 
REPRESENTATIONS AND WARRANTIES OF BUYER
 
Buyer hereby represents and warrants to Seller as follows:
 
5.1. Organization and Good Standing.  Buyer is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware.  Buyer has all requisite power and authority to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby and thereby to be consummated by it.
 
5.2. Authorization of Agreement.  The execution and delivery of this Agreement
by Buyer and the performance of the transactions contemplated herein by the
Buyer have been duly authorized by all necessary action by the Buyer, and no
other action on the part of Buyer is necessary to authorize this Agreement or to
consummate the transactions contemplated hereby.  This Agreement has been duly
and validly executed and delivered by Buyer and constitutes a valid and binding
obligation of Buyer and is enforceable against Buyer in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors generally and by
the availability of equitable remedies.
 
5.3. Conflicts, Consents of Third Parties.  Neither the execution and delivery
by Buyer of this Agreement nor consummation or performance by Buyer of the
transactions contemplated hereby to be consummated or performed by Buyer will:
(a) violate any Law, (b) violate the certificate of incorporation or bylaws of
Buyer, (c) violate any Order to which Buyer is a party or by which Buyer is
bound (d) violate any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise, or license
applicable to Buyer, (e) any joint venture or other ownership arrangement of
Buyer or (f) require any consent from, authorization or approval or other action
by, and no notice to or declaration, filing or registration with any
Governmental Authority.
 
5.4. No Default.  Except as would not reasonably be expected to have a Material
Adverse Effect on Buyer, Buyer is not in default or violation of any term,
condition or provision of (a) the certificate of incorporation or bylaws of
Buyer, (b) any loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise or license to
which Buyer is now a party or by which Buyer or any of its properties or assets
is bound, or (c) any Order applicable to Buyer.
 

Purchase and Sale Agreement Page 12

884040v.13
 
 

--------------------------------------------------------------------------------

 

5.5. Litigation.  As of the date of this Agreement there is no suit, action or
proceeding pending, or, to the knowledge of Buyer, threatened against or
affecting Buyer that is reasonably likely to have a Material Adverse Effect on
Buyer, nor is there any judgment, decree, injunction, rule or order of any
Governmental Authority or arbitrator outstanding against Buyer that is
reasonably likely to have a Material Adverse Effect on Buyer.
 
5.6. Brokers.  Buyer has not paid or become obligated to pay any fee or
commission to any broker, finder or intermediary in connection with the
transactions contemplated hereby for which Seller shall have any liability
following the Closing.
 
ARTICLE VI
 
ADDITIONAL AGREEMENTS
 
6.1. Further Actions.  At any time from and after the Closing, at the request of
a party and without further consideration, each other party shall promptly
execute and deliver such further agreements, certificates, instruments and
documents and perform such other actions, at no cost to such party, as the
requesting party may reasonably request in order to fully consummate the
transactions contemplated hereby and carry out the purposes and intent of this
Agreement.
 
6.2. Conduct of Business Pending Closing.  Prior to the Closing Date, Seller
will (except as consented to in writing by Buyer, such consent not to be
unreasonably withheld, or otherwise permitted under this Agreement):
 
(a) not terminate, materially amend, or extend any material Contracts affecting
the Properties, or enter into or commit to enter into any new material Contract
relating to the Properties, or settle, compromise or waive any material right
relating to the Properties,
 
(b) maintain insurance coverage on the Properties in the amounts and of the
types presently in force,
 
(c) maintain in full force and effect the Leases, and pay all costs and expenses
and perform all material obligations of the owner of the Properties promptly
when due,
 
(d) maintain all Permits,
 
(e) not transfer, sell, hypothecate, encumber, or otherwise dispose of any
Properties,
 
(f) not grant or create any preferential right to purchase, right of first
opportunity or other transfer restriction or requirement with respect to the
Properties, and
 
(g) not make any change in any method of accounting or accounting practice or
policy with respect to the Properties, except as required by Law.
 
6.3. Title Due Diligence Examination.
 

Purchase and Sale Agreement Page 13

884040v.13
 
 

--------------------------------------------------------------------------------

 

6.4. From the date of this Agreement, Seller shall afford to Buyer and Buyer’s
authorized representatives reasonable access during normal business hours to the
office, personnel and books and records of the Seller other than Excluded
Records, in order for Buyer to conduct a title examination as it may in its sole
discretion choose to conduct with respect to the Leases in order to determine
whether Title Defects (as below defined) exist (“Buyer’s Title Review”);
provided, however, that such investigation shall be upon reasonable notice and
shall not unreasonably disrupt the personnel and operations of the Seller or
impede the efforts of the Seller to comply with its other obligations under this
Agreement.  Such books and records shall include all abstracts of title, title
opinions, title files, ownership maps, lease files, assignments, division
orders, operating records and agreements, well files, financial and accounting
records, geological, geophysical and engineering records, in each case insofar
as same may now be in existence and in the possession of Seller and relate
predominately to title to the Leases.  The cost and expense of Buyer’s Title
Review, if any, shall be borne solely by Buyer.
 
(a) If Buyer discovers any Title Defect affecting any of the Leases, Buyer shall
notify Seller as soon as reasonably possible, but in all cases prior to the
termination of the AJDA (the “Title Objection Period”) of such alleged Title
Defect.  To be effective, such notice (“Title Defect Notice”) must (i) be in
writing, (ii) be received by Seller prior to the expiration of the Title
Objection Period, (iii) describe the Title Defect in reasonable detail
(including any alleged variance in the Net Revenue Interest), (iv) identify the
specific Lease affected by such Title Defect, and (v) include the value of such
Title Defect as determined by Buyer in good faith.  The Lease affected by such
alleged Title Defect shall be a “Title Defect Property”.
 
(b) The “Title Defect Amount” shall mean, with respect to a Title Defect
Property, the amount by which such Title Defect Property is impaired as a result
of the existence of one or more Title Defects, which amount shall not exceed the
portion of the Purchase Price attributable to such Lease (based on the Purchase
Price formula set forth in Section 3.1) and shall be determined as follows:
 
(i) The Title Defect Amount with respect to a Title Defect Property shall be
determined by taking into consideration the portion of the Purchase Price
attributable to the Lease subject to such Title Defect (based on the Purchase
Price formula set forth in Section 3.1), the portion of the Lease subject to
such Title Defect, and the legal effect of such Title Defect on the Lease
affected thereby; provided, however, that:  (A) if such Title Defect is in the
nature of Seller’s Net Revenue Interest in a Lease being less than the Net
Revenue Interest set forth on Exhibit “A” to this Agreement and the Working
Interest remains the same, then the Seller and Buyer agree that the Purchase
Price shall be reduced in an amount equal to the Purchase Price attributable to
the relevant Lease multiplied by the percentage reduction in such net revenue
interest as a result of such Title Defect or (B) if such Title Defect is in the
nature of a Lien which is undisputed and liquidated in amount, then the Seller
and Buyer agree that the Purchase Price shall be reduced in the amount equal to
the amount required to fully discharge such Lien; and
 
(ii) If the Title Defect results from any matter not described in this
Section 6.3, the Title Defect Amount shall be an amount equal to the difference
between
 

Purchase and Sale Agreement Page 14

884040v.13
 
 

--------------------------------------------------------------------------------

 

(iii) the value of the Lease affected by such Title Defect with such Title
Defect and the value of such Lease without such Title Defect (taking into
account the portion of the Purchase Price allocated to the Title Defect
Property).
 
(iv) Seller and Buyer acknowledge that several of the Eligible Leases, as shown
on Exhibit A, do not satisfy requirement (e) within the definition of “Eligible
Lease” (each a “Pooling Title Defect”) and these properties are listed on
Schedule 6.3(c)(iii) (each a “Pooling Defect Lease”).  In lieu of the options
otherwise provided in Section 6.3(e) below, each Pooling Defect Lease shall be
conveyed to Buyer at Closing and the Purchase Price shall be reduced by an
amount equal to twenty percent (20%) of the portion of the Purchase Price
attributable to such Lease under the formula in Section 3.1.  To the extent the
aggregate Purchase Price (after giving effect to such reduction) exceeds
Twenty-Three Million Five Hundred Thousand Dollars ($23,500,000.00), the
reduction in Purchase Price for Pooling Title Defects shall be applied solely to
reduce the portion of the Purchase Price to be satisfied pursuant to Section
3.2(b) hereof.  Seller shall diligently undertake to cure Pooling Title
Defects.  After Seller has cured Pooling Title Defects with respect to Pooling
Defect Leases aggregating 80% of the Purchase Price originally attributable to
all Pooling Defect Leases, then, with respect to Pooling Title Defects which are
thereafter cured, Buyer shall increase the credit available to Seller under
Section 3.2(b) in the amount of the Purchase Price value of the Pooling Title
Defects thereafter cured within thirty (30) days of Seller’s notification and
Buyer’s acceptance of such cure, such acceptance not to be unreasonably delayed
or withheld.
 
(v) At any time more than two (2) years after the Closing and prior to the
expiration of the AJDA, Buyer may give an actual Title Defect Notice to Seller
for any Pooling Title Defects remaining uncured, in which event Seller will pay
to Buyer the difference between the remaining eighty percent (80%) portion of
the Purchase Price originally attributable to all Pooling Defect Leases and the
original Purchase Price attributable to each Pooling Defect Lease theretofore
cured.  Thereafter subsequent cures of Pooling Title Defects by Seller prior to
the termination of the AJDA shall entitle Seller to be paid the original
Purchase Price attributable to such cured Pooling Defect Lease under the formula
in Section 3.1 in cash by Buyer within 30 days of Buyer’s notification and
Seller’s acceptance of such cure, such acceptance not to be unreasonably delayed
or withheld.
 
(c) If the amount of the adjustment for each Title Defect, other than a Pooling
Title Defect, cannot be determined based on the above criteria, and if the
Seller and Buyer cannot otherwise agree on the amount of an adjustment or the
parties are unable to agree upon whether a Title Defect exists, either party may
elect to resolve the dispute under the arbitration provisions in Section 12.1 of
this Agreement.
 
(d) Within sixty (60) days following receipt of a Title Defect Notice, Seller,
at its sole option, shall either (a) cure or remove such Title Defect at
Seller’s sole cost, or (b) pay in cash to Buyer the Title Defect Amount
associated with such Title Defect (the Title Defect Amount shall be determined
in accordance with the procedures in Section 6.3(c) above), or (c) repurchase
the Lease affected by such Title Defect from Buyer at the
 

Purchase and Sale Agreement Page 15

884040v.13
 
 

--------------------------------------------------------------------------------

 

(e) portion of the Purchase Price allocated to such Lease (such Closing shall
occur within thirty (30) days after expiration of the sixty (60) day election
period provided to Seller).
 
As used in this Section 6.3, “Title Defect” shall mean any particular defect in
or failure of Seller’s ownership of any Lease:  (i) that causes Seller to not
have conveyed Defensible Title to such Lease to Buyer at Closing or causes a
Lease not to be an Eligible Lease and (ii) regarding which a Title Defect Notice
has been timely and otherwise validly delivered.
 
(f) To the extent that Seller owns Leases which are not Eligible Leases due to
such Lease’s failure to meet the criteria in clause (a) of the definition of
Eligible Lease, and has a primary term which will expire prior to January 1,
2012, in the event that Seller and Buyer mutually agree that the primary term of
such Lease should be extended to render such Lease an Eligible Lease, the cost
of obtaining a renewal or extension of such Lease shall be shared in the
proportions of 75% to Buyer and 25% to Seller, notwithstanding any provisions of
the AJDA up to the first $2,000 per Net Mineral Acre represented by the Lease
being renewed or extended, with any additional costs shared 50% each pursuant to
the provisions of the AJDA.
 
(g) Certain of the Leases described on Exhibit A (“Counterpart Leases”) share
the same Lease ID number except for the letter at the end of the Lease ID number
(A, B, C, D, etc.).  For purposes hereof, the values assigned to the individual
leases within a group of Counterpart Leases shall be aggregated and then
allocated among the constituent individual leases proportionately on a Net
Mineral Acre basis as if title were as represented.
 
6.5. Access to Information.  Upon reasonable notice, Seller shall afford to
Buyer’s officers, employees, accountants, counsel and other representatives
access, from the date hereof until the termination of the AJDA, to all its
books, contracts, commitments, files and records relating to the Properties
other than Excluded Records, as well as to its officers and employees and,
during such period, Seller shall furnish to Buyer (a) a copy of each material
report, schedule, and other document filed or received by it during such period
and (b) all other information, other than Excluded Records, concerning the
Properties as such other party may reasonably request that is not subject to a
confidentiality agreement prohibiting Seller from furnishing.  Buyer agrees that
it will not, and will cause its respective representatives not to, use any
information obtained pursuant to this Section 6.4 for any purpose unrelated to
the consummation of the transactions contemplated by this Agreement.  Buyer
shall indemnify, defend and hold harmless the Seller from and against any and
all claims, actions, causes of action, demands, assessments, losses, damages,
liabilities, judgments, settlements, penalties, costs and expenses (including
reasonable attorneys’ fees and expenses), of any nature whatsoever asserted
against or suffered by the Seller relating to, resulting from or arising out of
examinations or inspections made by Buyer or its representatives pursuant to
this Section 6.4.  The foregoing indemnity is not intended to negate any rights
or remedies Buyer may have under the remaining provisions hereof.
 
6.6. Regulatory Approvals.  Each party hereto shall cooperate and use its
reasonable best efforts to promptly prepare and file all necessary documentation
to effect all necessary
 

Purchase and Sale Agreement Page 16

884040v.13
 
 

--------------------------------------------------------------------------------

 

6.7. applications, notices, petitions, filings and other documents, and use all
commercially reasonable efforts to obtain (and will cooperate with each other in
obtaining) any consent, acquiescence, authorization, order or approval of, and
any exemption or non-opposition by, any Governmental Authority required to be
obtained or made by Seller or Buyer or any of their respective Affiliates in
connection with the transactions contemplated hereby or the taking of any action
contemplated by this Agreement.
 
6.8. Agreement to Defend.  In the event any claim, action, suit, investigation
or other proceeding by any Governmental Authority or other legal or
administrative proceeding is commenced that questions the validity or legality
of the transactions contemplated hereby or seeks damages in connection
therewith, the parties hereby agree to cooperate and use their commercially
reasonable efforts to defend against and respond thereto.
 
6.9. Consents and Preferential Rights.  Seller shall promptly prepare and send
(i) notices to the holders of any required consents to assignment requesting
such consents and (ii) notices to the holders of any applicable preferential
rights to purchase which are set forth on Schedule 4.11 requesting waivers of
such preferential rights to purchase.  The consideration payable under this
Agreement for any particular property for purposes of preferential purchase
right notices shall be the portion of the Purchase Price attributable to such
property.  Seller shall use commercially reasonable efforts to cause such
consents and waivers of preferential rights to purchase (or the exercise
thereof) to be obtained and delivered prior to Closing.  Buyer shall cooperate
with Seller in seeking to obtain such consents and waivers of preferential
rights.
 
6.10. Other Actions.  Except as contemplated by this Agreement, neither Seller
nor Buyer shall, nor permit any of its Affiliates to, take or agree or commit to
take any action that is reasonably likely to result in any of its respective
representations or warranties hereunder being untrue in any material respect or
in any of the conditions to the transactions contemplated hereby set forth in
Article VI not being satisfied.  Each of the parties agrees to use its
reasonable best efforts to satisfy the conditions to Closing set forth in this
Agreement.
 
6.11. Option Assets.  To the extent that oil, gas and mineral leases or fee
mineral interests which would constitute Marion County Leases or Tyler County
Leases (a) are owned by Seller or its Affiliates as of the date hereof but are
not transferred to Buyer at the Closing due to the fact that they were not
identified by Seller to Buyer, or (b) are oil, gas and mineral leases which
would constitute Marion County Leases or Tyler County Leases but are not
conveyed to Buyer at Closing due to Title Defects which are uncured at Closing
(in either case, “Option Assets”), Buyer shall have an exclusive and irrevocable
option (the “Option”) to purchase any or all of the such oil, gas and mineral
leases or interests therein at the Purchase Price formula contained in Section
3.1, with the consideration payable by increasing the credit to Seller under
Section 3.2(b) by the amount of such Purchase Price increase upon assignment and
additional contingent consideration due to Seller in the case of Tyler County
Leases as provided in Section 3.3.
 
Such Option shall be exercisable by Buyer in whole or in part (as to an
undivided 50% interest of Seller in any such Lease) at any time within thirty
(30) days after either of Seller or Buyer notifies the other of the existence
and identity of the specific Option Assets affected in the case of Option Assets
as described in clause (a) of the preceding paragraph or after cure of the
 

Purchase and Sale Agreement Page 17

884040v.13
 
 

--------------------------------------------------------------------------------

 

relevant Title Defects in the case of Option Assets as described in clause (b)
of the preceding paragraph but in no event after termination of the AJDA (the
“Option Term”).  To the extent that the Option has not been exercised as to any
of the Option Assets in whole prior to the end of the Option Term, then the
rights and obligations set forth in this Section 6.9 shall expire and cease to
be of any further force or effect as to those Option Assets.
 
If Buyer elects to exercise the Option in whole or in part at any time during
the Option Term with respect to certain Option Assets, Buyer shall deliver a
written notice to Seller (the “Exercise Notice”) identifying the Leases it
elects to purchase and specifying a date not earlier than ten (10) business days
nor later than forty-five (45) business days after the date of such notice for
the Closing of the purchase and sale of such Leases (the “Option Closing”).
 
The terms governing the purchase and sale of such Leases shall be substantially
the same as the terms governing the purchase and sale pursuant to this Agreement
(with such changes as shall have been agreed upon by Seller and Buyer), except
that the representations and warranties made by Seller with respect to such
Leases shall be modified to reflect the title to such Leases held by Seller.
 
The Option Closing shall be held at the principal office of Buyer, or such other
location as may be agreed in writing by Buyer and Seller.  At the Option
Closing, Seller shall deliver a conveyance in the form attached hereto as
Exhibit B-1 and such other assignments, general conveyances, endorsements,
assignments, and other good and sufficient instruments of conveyance as are
necessary in order to vest in Buyer all right, title and interest in the Leases
that are the subject of the applicable Exercise Notice and Buyer shall
acknowledge the increase in the credit available under Section 3.2(b) at the
Option Closing.
 
Seller agrees that it shall not, at any time prior to the end of the Option
Term, directly or indirectly, sell, transfer, or otherwise dispose of, or enter
into any contract or arrangement to sell, transfer, or otherwise dispose of, all
or any part of the Option Assets, other than pursuant to the exercise of the
Option.
 
ARTICLE VII
 
CONDITIONS TO CLOSING
 
7.1. Buyer’s Conditions.  Unless otherwise waived in writing prior to the
Closing, the obligation of Buyer to complete the Closing is subject to
fulfillment prior to or at the Closing of each of the following conditions:
 
(a) No Legal Proceeding.  At the Closing, no Legal Proceeding shall be pending
or threatened seeking to enjoin or prevent, nor shall an Injunction, Order or
Official Action have been issued prohibiting, consummation of the transactions
contemplated hereby.
 
(b) Fulfillment of Obligations.  Seller shall have duly performed or complied
with all of the obligations and covenants to be performed or to which compliance
by Seller is required under the terms of this Agreement at or prior to the
Closing Date.
 

Purchase and Sale Agreement Page 18

884040v.13
 
 

--------------------------------------------------------------------------------

 

(c) Accuracy of Representations and Warranties.  The representations and
warranties of Seller set forth herein shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date.
 
(d) Closing Deliveries.  Seller shall have delivered at or before Closing all of
the items listed in Section 8.1.
 
(e) Simultaneous Closing.  Sancho Oil and Gas Corporation shall have performed
all of its closing obligations pursuant to the Related Contract.
 
(f) AJDA Amendment.  Sancho Oil and Gas Corporation and Prima Oil Company, Inc.
have executed and delivered to Buyer two executed counterparts of the AJDA
Amendment.
 
7.2. Seller’s Conditions.  Unless otherwise waived in writing prior to Closing,
the obligation of Seller to complete the Closing is subject to fulfillment prior
to or at Closing of each of the following conditions.
 
(a) No Legal Proceeding.  At the Closing, no Legal Proceeding shall be pending
or threatened seeking to enjoin or prevent, nor shall an Injunction, Order or
Official Action have been issued prohibiting, consummation of the transactions
contemplated hereby.
 
(b) Fulfillment of Obligations.  Buyer shall have duly performed or complied
with all of the obligations and covenants to be performed or to which compliance
by Buyer is required under the terms of this Agreement at or prior to the
Closing Date
 
(c) Accuracy of Representations and Warranties.  The representations and
warranties of Buyer set forth herein shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date.
 
(d) Closing Deliveries.  Buyer shall have delivered at or before Closing all of
the items listed in Section 8.2.
 
ARTICLE VIII
 
DELIVERIES AT CLOSING
 
8.1. Deliveries by Seller to Buyer.  At the Closing, Seller shall deliver, or
shall cause to be delivered, to Buyer the following:
 
(a) A certificate duly executed by the secretary or any assistant secretary of
Seller, dated the Closing Date, (i) attaching and certifying on behalf of the
Seller complete and correct copies of resolutions of the board of directors or
other governing body of Seller authorizing the execution, delivery and
performance by Seller of this Agreement and the transactions contemplated hereby
and that such authorizations are in full force and effect and have not been
rescinded or amended as of the Closing Date, and
 

Purchase and Sale Agreement Page 19

884040v.13
 
 

--------------------------------------------------------------------------------

 

(b) (ii) certifying on behalf of Seller the incumbency and signature of each
officer of Seller executing this Agreement or any document delivered in
connection with the Closing;
 
(c) A certificate of Seller or duly authorized officer thereof certifying as to
those matters set out in Section 7.1(a), (b) and (c) hereof;
 
(d) The Conveyance and Override Assignment in sufficient duplicate originals to
allow recording in all appropriate jurisdictions and offices, duly executed by
Seller;
 
(e) Executed statements described in Treasury Regulation 1.1445-2(b)(2)
certifying that each Seller is not a foreign person within the meaning of the
Code.
 
(f) Two fully executed counterparts of a Fourth Amendment to Farm-out and Area
of Joint Development Agreement in the form attached hereto as Exhibit C (the
“AJDA Amendment”), amending the AJDA as stated therein.
 
8.2. Deliveries by Buyer to Seller.  At the Closing, in addition to making the
payments described in Section 3.2, Buyer shall deliver to each Seller the
following:
 
(a) A certificate of a duly authorized representative of Buyer, dated the
Closing Date, (i) attaching and certifying on behalf of the Seller complete and
correct copies of resolutions of the board of directors or other governing body
of Seller authorizing the execution, delivery and performance by Seller of this
Agreement and the transactions contemplated hereby and that such authorizations
are in full force and effect and have not been rescinded or amended as of the
Closing Date, and  (ii) certifying on behalf of Seller the incumbency and
signature of each officer of Seller executing this Agreement or any document
delivered in connection with the Closing;
 
(b) A certificate of Buyer or duly authorized officer thereof certifying as to
those matters set out in Section 7.2(a), (b) and (c) hereof;
 
(c) The Conveyance and Override Assignment duly executed by Buyer on each
duplicate original delivered by Seller; and
 
(d) Two fully executed counterparts of the AJDA Amendment.
 
ARTICLE IX
 
TERMINATION
 
9.1. Termination.  This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing Date:
 
(a) by mutual written consent of the Seller and Buyer;
 
(b) by the Seller or Buyer if any Governmental Authority shall have issued any
Injunction or taken any other action permanently restraining, enjoining or
otherwise
 

Purchase and Sale Agreement Page 20

884040v.13
 
 

--------------------------------------------------------------------------------

 

(c) prohibiting the consummation of the transactions contemplated hereby and
such Injunction or other action shall have become final and non-appealable; or
 
(d) by Seller or Buyer if the other shall have failed or refused to Close the
transaction contemplated hereby on or before July 31, 2010, or such later date
as mutually agreed.
 
9.2. Effect of Termination.  In the event of termination of this Agreement by
any party hereto as provided in Section 9.1, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of any
party hereto except (i) with respect to this Section 9.2, Section 12.12, and the
last sentence of Section 6.4, and (iii) to the extent that such termination
results from the willful breach  by a party hereto of any of its representations
and warranties or of any of its covenants or agreements contained in this
Agreement.
 
ARTICLE X
 
INDEMNIFICATION
 
10.1. Assumption and Indemnification.
 
(a) FROM AND AFTER CLOSING, BUYER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS
SELLER, ITS AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, AGENTS,
EMPLOYEES AND REPRESENTATIVES (“SELLER GROUP”) FROM AND AGAINST ALL LOSSES (as
defined below in Subsection 10.1(d)) INCURRED OR SUFFERED BY SELLER GROUP:
 
(i) CAUSED BY OR ARISING OUT OF OR RESULTING FROM THE ASSUMED OBLIGATIONS
(defined below);
 
(ii) CAUSED BY OR ARISING OUT OF OR RESULTING FROM THE OWNERSHIP, USE OR
OPERATION OF THE PROPERTIES, ON OR AFTER THE CLOSING DATE; OR
 
(iii) CAUSED BY OR ARISING OUT OF OR RESULTING FROM ANY BREACH OF ANY
REPRESENTATION, WARRANTY OR COVENANT MADE BY BUYER CONTAINED IN ARTICLE V OF
THIS AGREEMENT.
 
Upon and after Closing, Buyer shall assume and perform all the rights, duties,
obligations and liabilities of ownership of the Properties including, without
limitation:  (A) a proportionate share of Seller’s express and implied
obligations and covenants after the Closing Date under the terms of the Leases,
the Contracts, and all other orders, rules and regulations to which the
Properties are subject; (B) a proportionate share of responsibility for all
royalties, overriding royalties, rentals, shut-in payments and other burdens or
encumbrances to which the Properties are subject accruing after the Closing
Date; (C) responsibility for compliance with all applicable Laws pertaining to
the Properties, and the procurement and maintenance of all permits required by
public authorities in connection with the Properties after the Closing Date; and
(D) all other obligations assumed by Buyer under this Agreement (the “Assumed
Obligations”).  Seller remains
 

Purchase and Sale Agreement Page 21

884040v.13
 
 

--------------------------------------------------------------------------------

 

responsible for all costs, expenses and liabilities incurred by Seller in
connection with the ownership or operation of the Properties before the Closing
Date, except (A) those for which Buyer indemnifies Seller under 10.1(a)(i) or
10.1(a)(iii); or, (B) those arising out of specific matters or claims for which
Buyer has received an adjustment to the Purchase Price (the “Retained
Obligations”).
 
(b) FROM AND AFTER CLOSING, AND EXCEPT AS PROVIDED IN SUBSECTION 10.1(a), SELLER
SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS BUYER AND ITS OFFICERS, DIRECTORS,
AGENTS, EMPLOYEES AND REPRESENTATIVES AGAINST AND FROM ALL LOSSES INCURRED OR
SUFFERED BY BUYER:
 
(i) CAUSED BY OR ARISING OUT OF OR RESULTING FROM THE OWNERSHIP, USE OR
OPERATION OF THE PROPERTIES ON OR BEFORE THE CLOSING DATE;
 
(ii) ATTRIBUTABLE TO OR ARISING OUT OF THE ACTIONS, SUITS, OR PROCEEDINGS, IF
ANY, SET FORTH ON SCHEDULE 4.5; OR
 
(iii) CAUSED BY OR ARISING OUT OF OR RESULTING FROM ANY BREACH OF ANY
REPRESENTATION OR WARRANTY MADE BY SUCH SELLER CONTAINED IN ARTICLE IV OF THIS
AGREEMENT
 
(iv) CAUSED BY OR ARISING OUT OF OR RESULTING FROM THE RETAINED OBLIGATIONS.
 
(c) Damages or other claims for Title Defects shall be exclusively handled
pursuant to Section 6.3 and are excluded from indemnification under this
Article X or otherwise.
 
(d) “Losses”, for purposes of this Article X shall mean the amount of any actual
liability, loss, cost, expense, claim, award or judgment incurred or suffered by
any Indemnified Party (as defined in Section 10.2) arising out of or resulting
from the indemnified matter, including reasonable fees and expenses of
attorneys, consultants, accountants or other agents and experts reasonably
incident to matters indemnified against, and the costs of investigation and/or
monitoring of such matters, and the costs of enforcement of the indemnity;
provided, however, that Buyer and Seller shall not be entitled to
indemnification under this Section 10.1(d) for, and “Losses” shall not include,
(i) loss of profits or other consequential damages suffered by the party
claiming indemnification, or (ii) any special or punitive damages (other than
indirect, consequential, special or punitive damages suffered by third Persons
and payable by an Indemnified Person).
 
(e) The indemnity of each party provided in this Article X shall be for the
benefit of and extend to such party’s present and former Affiliates, and its and
their respective directors, officers, employees, and agents.  Any claim for
indemnity under this Article X by any such Affiliate, director, officer,
employee, or agent must be brought and
 

Purchase and Sale Agreement Page 22

884040v.13
 
 

--------------------------------------------------------------------------------

 

(f) administered by the applicable party to this Agreement.  No Indemnified
Party other than Seller and Buyer shall have any rights against either Seller or
Buyer under the terms of this Article X except as may be exercised on its behalf
by Buyer or Seller, as applicable, pursuant to this Section 10.1(e).  Seller and
Buyer may elect to exercise or not exercise indemnification rights under this
Section on behalf of the other Indemnified Parties affiliated with it in its
sole discretion and shall have no liability to any such other Indemnified Party
for any action or inaction under this Section.
 
(g) Notwithstanding anything to the contrary set forth in this Agreement, Seller
shall have no liability to Buyer or its officers, directors, agents, employees
and representatives or obligation to indemnify Buyer for any specific matter or
claim for which Buyer has received an adjustment to the Purchase Price.
 
10.2. Indemnification Procedures.
 
(a) If any third party asserts any claim against a party to this Agreement
which, if successful, would entitle the party to indemnification under this
Article X (the “Indemnified Party”), it shall give notice of such claim to the
party from whom it intends to seek indemnification (the “Indemnifying Party”)
and the Indemnifying Party shall have the right to assume the defense and,
subject to Section 10.2(b), settlement of such claim at its expense by
representatives of its own choosing acceptable to the Indemnified Party (which
acceptance shall not be unreasonably withheld).  The failure of the Indemnified
Party to notify the Indemnifying Party of such claim shall not relieve the
Indemnifying Party of any liability that the Indemnifying Party may have with
respect to such claim, except to the extent that the defense is materially
prejudiced by such failure.  The Indemnified Party shall have the right to
participate in the defense of such claim at its expense (which expense shall not
be deemed to be a Loss), in which case the Indemnifying Party shall cooperate in
providing information to and consulting with the Indemnified Party about the
claim.  If the Indemnifying Party fails or does not assume the defense of any
such claim within 15 days after written notice of such claim has been given by
the Indemnified Party to the Indemnifying Party, the Indemnified Party may
defend against or, subject to Section 10.2(b), settle such claim with counsel of
its own choosing at the expense (to the extent reasonable under the
circumstances) of the Indemnifying Party.
 
(b) If the Indemnifying Party does not assume the defense of a claim involving
the asserted liability of the Indemnified Party under this Article X, no
settlement of such claim shall be made by the Indemnified Party without the
prior written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed.  If the Indemnifying Party assumes the defense
of such a claim, (i) no settlement thereof may be effected by the Indemnifying
Party without the Indemnified Party’s consent unless (A) there is no finding or
admission of any violation of Law or any violation of the rights of any Person
and no effect on any other claim that may be made against the Indemnified Party,
(B) the sole relief provided is monetary damages that have been paid in full by
the Indemnifying Party, and (C) the settlement includes, as an unconditional
term thereof, the giving by the claimant or the plaintiff to the Indemnified
Party of a release in form and substance reasonably satisfactory to the
Indemnified Party,
 

Purchase and Sale Agreement Page 23 

884040v.13
 
 

--------------------------------------------------------------------------------

 

(c) from all liability in respect of such claim, and (ii) the Indemnified Party
shall have no liability with respect to any compromise or settlement thereof
effected without its consent.  Notwithstanding anything in this Agreement to the
contrary, the Litigation shall not be settled or compromised on any terms and
conditions without the prior written consent of Seller’s Representative.
 
10.3. Limits on Indemnification.  Notwithstanding anything to the contrary
contained in this Agreement:
 
(a) The respective representations of the Seller and Buyer contained in this
Agreement shall survive the Closing, subject to applicable statutes of
limitation or repose.
 
(b) Any payments made to Seller or the Buyer pursuant to this Article X shall
constitute an adjustment of the Purchase Price for Tax purposes and shall be
treated as such by the Buyer and Seller on their Tax Returns.
 
ARTICLE XI
 
TAXES
 
11.1. Cooperation.  Each party shall provide the other party with such
cooperation and information as it reasonably may request with respect to the
Properties in filing any Tax Return, amended Tax Return or claim for refund,
determining a liability for Taxes or a right to a refund of Taxes or
participating in or conducting any audit or other proceeding in respect of
Taxes.  Each party shall bear its own expenses in complying with the foregoing
provisions.
 
11.2. Sales or Use Tax, Recording Fees and Similar Taxes and Fees.  Buyer shall
pay its proportionate share of any sales, use, excise, documentary, stamp or
transfer Taxes, recording fees and similar Taxes and fees incurred and imposed
upon, or with respect to, the property transfers or other transactions
contemplated hereby.  If such transfers or transactions are exempt from any such
taxes or fees upon the filing of an appropriate certificate or other evidence of
exemption, Buyer will timely furnish to Seller such certificate or evidence.
 
ARTICLE XII
 
GENERAL
 
12.1. Arbitration.
 
(a) Except for the right to apply to a court of competent jurisdiction for a
temporary restraining order, a preliminary injunction, or other equitable relief
to preserve the status quo or prevent irreparable harm, any controversy or
failure to agree arising under this Agreement and not resolved by agreement
shall be determined by a board of arbitration upon notice of submission given by
Buyer to Seller, or vice versa, which notice shall name a qualified, impartial,
and independent arbitrator.  Within ten (10) days after the receipt of such
notice, the other party or parties shall name a second qualified, impartial and
independent arbitrator, or failing to do so, the party giving notice shall name
the second arbitrator.  Within twenty-five (25) days after sending the original
notice of submission the two arbitrators so appointed shall name the third
qualified, independent
 

Purchase and Sale Agreement Page 24

884040v.13
 
 

--------------------------------------------------------------------------------

 

(b) arbitrator, or failing to do so, the third arbitrator may be appointed by
the American Arbitration Association..
 
(c) The arbitrators selected to act hereunder shall be qualified by education
and experience to pass on the particular question in dispute.  The arbitrators
shall promptly hear and determine (after due notice of hearing and giving the
parties a reasonable opportunity to be heard) the questions submitted, and shall
render their decision within sixty (60) days after appointment of the third
arbitrator.  If within said period a decision is not rendered by the board, or
majority thereof, new arbitrators may be named and shall act hereunder at the
election of either Buyer or Seller in like manner as if none has been previously
named.
 
(d) The arbitration proceeding shall be held in Kanawha County, West Virginia in
accordance with the Commercial Arbitration Rules of the AAA as in effect on the
date thereof .
 
(e) The decision of the arbitrators, or the majority thereof, made in writing
shall be final, binding and non-appealable upon the parties hereto as to the
questions submitted, and Buyer and Seller will abide by and comply with such
decision.  The expenses of arbitration, including reasonable compensation of the
arbitrators, shall be borne equally by the parties hereto, except that each
party shall bear the compensation and expenses of its own counsel, witnesses,
and employees.
 
12.2. Amendments.  This Agreement may only be amended by an instrument in
writing executed by Buyer and Seller.
 
12.3. Waivers.  The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but such waiver shall
be effective only if it is in a writing signed by the party entitled to enforce
such term and against which such waiver is to be asserted.  Unless otherwise
expressly provided in this Agreement, no delay or omission on the part of any
party in exercising any right or privilege under this Agreement shall operate as
a waiver thereof, nor shall any waiver on the part of any party of any right or
privilege under this Agreement operate as a waiver of any other right or
privilege under this Agreement nor shall any single or partial exercise of any
right or privilege preclude any other or further exercise thereof or the
exercise of any other right or privilege under this Agreement.
 
12.4. Notices.  Any notice or other communications required or permitted
hereunder shall be in writing and shall be sufficiently given (and shall be
deemed to have been duly given upon receipt) if sent by overnight mail,
registered mail or certified mail, postage prepaid, or by hand, to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
 
(a) If to Buyer, to:
 
Republic Energy Ventures, LLC
 
4925 Greenville Avenue, Suite 1050
 

Purchase and Sale Agreement Page 25

884040v.13
 
 

--------------------------------------------------------------------------------

 

Dallas, Texas 75206
 
Attn: John Swanson
 
With a copy to:
 
Carrington Coleman Sloman & Blumenthal, LLP
 
901 Main Street, Suite 5500
 
Dallas, Texas 75202
 
Attn:  David G. Drumm, Esq.
 
(b) If to the Seller, to:
 
Trans Energy, Inc.
 
P.O. Box 393
 
St. Marys, West Virginia 26170
 
Attn: John G. Corp, President
 
With a copy to:
 
Burleson Cooke, LLP
 
711 Louisiana Street, Suite 1701
 
Houston, Texas 7002
 
Attn:  Allan R Conge, Esq.
 
12.5. Successor and Assigns, Parties in Interest.  This Agreement shall be
binding upon and shall inure solely to the benefit of the parties hereto and
their respective successors, legal representatives and permitted
assigns.  Nothing in this Agreement, express or implied, is intended to or shall
confer upon any Person, other than the parties hereto and their respective
successors, legal representatives and permitted assigns, any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement, and no
Person shall be deemed a third party beneficiary under or by reason of this
Agreement.  Seller waives any preferential rights, “tag-along rights” or similar
rights it may have under the AJDA with respect to the assignment by Buyer of its
rights under this Agreement to an entity to which Buyer makes a contribution of
such rights as a constituent member thereof.
 
12.6. Severability.  If any provision of this Agreement or the application of
any such provision to any Person or circumstance, shall be declared judicially
to be invalid, unenforceable or void, such decision shall not have the effect of
invalidating or voiding the remainder of this Agreement, it being the intent and
agreement of the parties that this Agreement shall be deemed amended by
modifying such provision to the extent necessary to render it valid, legal and
enforceable while preserving its intent or, if such modification is not
possible, by substituting therefor another provision that is valid, legal and
enforceable and that achieves the same objective.
 
12.7. Entire Agreement.  This Agreement (including the Exhibits and Schedules
hereto, and the documents and instruments executed and delivered in connection
herewith) constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements
and understandings, whether written or oral, among
 

Purchase and Sale Agreement Page 26

884040v.13
 
 

--------------------------------------------------------------------------------

 

12.8. the parties or any of them with respect to the subject matter hereof, and
there are no representations, understandings or agreements relating to the
subject matter hereof that are not fully expressed in this Agreement and the
documents and instruments executed and delivered in connection herewith.  All
Exhibits and Schedules attached to this Agreement are expressly made a part of,
and incorporated by reference into, this Agreement.
 
12.9. Schedules.  Nothing in the Schedules is intended to broaden the scope of
any representation or warranty contained in the Agreement or to create any
covenant unless clearly specified to the contrary herein.  Any disclosure on one
Schedule shall be deemed to be disclosed on all Schedules and under the
Agreement.  Inclusion of any item in the Schedules (a) shall be deemed to be
disclosure of such item on all Schedules and under the Agreement, (b) does not
represent a determination that such item is material nor shall it be deemed to
establish a standard of materiality, (c) does not represent a determination that
such item did not arise in the ordinary course of business, (d) does not
represent a determination that the transactions contemplated by the Agreement
require the consent of third parties and (e) shall not constitute, or be deemed
to be, an admission to any third party concerning such item.  The Schedules
include descriptions of instruments or brief summaries of certain aspects of
Seller and the Properties.  The descriptions and brief summaries are not
necessarily complete and are provided in the Schedules to identify documents or
other materials previously delivered or made available.
 
12.10. Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without giving effect to any
choice-of-law rules that may require the application of the laws of another
jurisdiction.  Venue for any proceeding hereunder shall be in the District Court
of Kanawha County, West Virginia.
 
12.11. Remedies.  Each of the parties hereto acknowledges and agrees that
(i) the provisions of this Agreement are reasonable and necessary to protect the
proper and legitimate interests of the other parties hereto, and (ii) the other
parties hereto would be irreparably damaged in the event any of the provisions
of this Agreement were not performed in accordance with their specific terms or
were otherwise breached.  It is accordingly agreed that the parties hereto shall
be entitled to preliminary and permanent injunctive relief to prevent breaches
of the provisions of this Agreement by other parties hereto without the
necessity of proving actual damages upon posting of a suitable bond, and to
enforce specifically the terms and provisions hereof and thereof, which rights
shall be cumulative and in addition to any other remedy to which the parties
hereto may be entitled hereunder or at law or equity.
 
12.12. Expenses.  The Seller and Buyer shall each bear their own expenses
(including, without limitation, fees and disbursements of counsel, accountants
and other experts) incurred by it in connection with the preparation,
negotiation, execution, delivery and performance of this Agreement, each of the
other documents and instruments executed in connection with or contemplated by
this Agreement and the consummation of the transactions contemplated hereby and
thereby.
 
12.13. Release of Information; Confidentiality.  The parties shall cooperate
with each other in releasing information concerning this Agreement and the
transactions contemplated hereby.  No press releases or other public
announcements concerning the transactions contemplated by this Agreement shall
be made by any party without prior consultation with and
 

Purchase and Sale Agreement Page 27

884040v.13
 
 

--------------------------------------------------------------------------------

 

12.14. written consent of each other party, except for any legally required
communication by any party and then only with prior consultation and at least 12
hours notice together with copies of all drafts of the proposed text, prior to
the time the communication is made public.  Neither party shall disclose,
without the prior written consent of the other party, the economic terms of the
transaction effected hereby, or the terms and provisions of this Agreement,
except as  may be required by law.
 
12.15. Certain Construction Rules.  The article and section headings contained
in this Agreement are for convenience of reference only and shall in no way
define, limit, extend or describe the scope or intent of any provisions of this
Agreement.  Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.  In addition, as used in this Agreement, unless otherwise provided to the
contrary, (a) all references to days, months or years shall be deemed references
to calendar days, months or years and (b) any reference to a “Section,”
“Article,” or “Schedule” shall be deemed to refer to a section or article of
this Agreement or an Exhibit or Schedule attached to this Agreement.  The words
“hereof”, “herein”, and “hereunder” and words of similar import referring to
this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement.  Unless otherwise specifically provided for herein,
the term “or” shall not be deemed to be exclusive.
 
12.16. Counterparts.  This Agreement may be executed (including by facsimile
transmission) in multiple counterparts, each of which shall be deemed an
original and all of which taken together shall constitute one instrument binding
on all the parties, notwithstanding that all the parties are not signatories to
the original or the same counterpart.
 

Purchase and Sale Agreement Page 28

884040v.13
 
 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first
above written.
 
BUYER:
 
REPUBLIC ENERGY VENTURES, LLC,
 
a Delaware limited liability company
 
By:                                                                       
 
Name:                                                                       
 
Title:                                                                       
 

 
SELLER:
 
TRANS ENERGY, INC.,
 
a Nevada corporation
 
By:                                                                       
 
Name:                                                                       
 
Title:                                                                       
 

 
PRIMA OIL COMPANY, INC.,
 
a Delaware corporation
 
By:                                                                       
 
Name:                                                                       
 
Its:                                                                                 
 

Purchase and Sale Agreement Page 29

884040v.13
 
 

--------------------------------------------------------------------------------

 

EXHIBIT A
 
Description of Properties
 
 
[teng-exa1.jpg]
 
 

 
  
Purchase and Sale
Agreement Page 30                                                                                                                                       

884040v.13
 
 

--------------------------------------------------------------------------------

 
[teng-exa2.jpg]

Purchase and Sale Agreement Page 31
                                                                                                                                  

884040v.13

 
 

--------------------------------------------------------------------------------

 
 

[teng-exa3.jpg]
Purchase and Sale Agreement Page 32

884040v.13
 
 

--------------------------------------------------------------------------------

 

[teng-exa4.jpg]

 

Purchase and Sale Agreement Page 33

884040v.13
 
 

--------------------------------------------------------------------------------

 
[teng-exa5.jpg]

 

Purchase and Sale Agreement Page 34

884040v.13
 
 

--------------------------------------------------------------------------------

 
[teng-exa6.jpg]

 

Purchase and Sale Agreement Page 35

884040v.13
 
 

--------------------------------------------------------------------------------

 

EXHIBIT B-1
 
CONVEYANCE, ASSIGNMENT, AND BILL OF SALE
 
This CONVEYANCE, ASSIGNMENT AND BILL OF SALE (“Conveyance”) is executed this ___
day of __________, 2010, by TRANS ENERGY, INC., a Nevada corporation, and PRIMA
OIL COMPANY, INC., a Delaware corporation (referred to collectively herein as
“Assignor”) and Republic Energy Ventures, LLC, a Delaware limited liability
company (herein called “Assignee”), having as its address 4925 Greenville
Avenue, Suite 1050, Dallas, Texas, 75206.  Assignor and Assignee each may be
referred to in this Conveyance individually as a “Party” and collectively as the
“Parties.”
 
BACKGROUND
 
Pursuant to that certain Agreement of Sale and Purchase, dated __________ ___,
2010, (as amended, supplemented or otherwise modified from time to time, the
“Agreement”), by and between Assignor and Assignee, Assignor has agreed to
grant, transfer, bargain, sell, convey, assign and deliver the Properties (as
defined below) to Assignee, and Assignee has agreed to purchase and acquire such
Properties from Assignor.
 
NOW, THEREFORE, in consideration of the foregoing premises and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows:
 
ARTICLE I
 
GRANTING AND RESERVATION CLAUSES; WARRANTY; HABENDUM CLAUSE
 
1.1. Grant.  For Ten Dollars ($10.00) and other good and valuable consideration,
the receipt and sufficiency of which hereby each Party acknowledges, Assignor
has granted, transferred, bargained, sold, conveyed, assigned and delivered, and
does hereby grant, transfer, bargain, sell, convey, assign and deliver to
Assignee, all of the following described properties, rights and interests:
 
(a) The respective undivided Working Interests or “CO WI’s” (as these terms are
hereinafter defined) and Net Revenue Interests or “CO NRI’s” (as these terms are
hereinafter defined) in, together with an equivalent share of Assignor’s other
rights, titles and interests in and to, the oil, gas and/or mineral leases,
leasehold interests, and overriding royalty interests, described in Exhibit A
hereto and any rights and interests attributable to any of the foregoing
interests by virtue of any pooling, unitization, communalization, operating or
other agreements (and in and to any ratifications and/or amendments to such
leases, whether or not such ratifications or amendments are described in
Exhibit A) (collectively the “Leases”); and
 
(b) An equivalent share of the rights, titles and interests of Assignor in and
to all contracts and agreements relating to the Leases including but not limited
to production sales contracts, operating agreements, unit agreements, processing
agreements, transportation agreement, and other contracts and agreements which
relate to any of the
 

Conveyance, Assignment and Bill of Sale Page 1
884040v.13
 
 

--------------------------------------------------------------------------------

 

(c) Leases, to the extent and only to the extent, such rights, titles and
interests are attributable to the Leases (collectively the “Contracts”); and
 
(d) An equivalent share of the rights, titles and interests of Assignor in and
to all rights of way, easements, surface leases, and other rights of surface use
which relate to any of the Leases to the extent and only to the extent such
rights are attributable to the Leases (collectively, the “Surface Interests”);
and
 
(e) Copies of all of Assignor’s files, records, documents, correspondence and
data pertaining to the interests described in subsections (a), (b), and (c) of
this Section 1.1, including lease files, land files, well files, contract files,
division order files, title opinions, engineering files, geological, geophysical
and seismic records, plats, surveys, maps, cross-sections, production records,
electric logs, cuttings, cores, core data, pressure data, decline and production
curves, well files and all related matters, but excluding any interpretive
information pertaining to economic or reserve forecasts (collectively,
“Records”).
 
The Leases, Contracts, Surface Interests, and Records are herein sometimes
collectively called the “Properties” and each is a “Property”.  For purposes
hereof, the terms (x) “Net Revenue Interest” (or “NRI)” means the  undivided
interest in Hydrocarbons produced from or attributable to the applicable well,
oil and gas lease or mineral lease, or other acreage, after deducting all
lessor’s royalties, overriding royalties, production payments, and other
interests or burdens on Hydrocarbons produced therefrom, expressed as a
percentage or a decimal; and (y) “Working Interest” (or “WI”) means that share
of the costs, expenses, burdens, and obligations of any type or nature
attributable to Assignor’s interest in the applicable well, oil and gas lease or
mineral lease, or other acreage, expressed as a percentage or a decimal.  The
Property conveyed herein shall not include any interest in personal property of
the Assignor that might be located on or affixed to the lands covered by a
Lease.  Personal property located on or affixed to the lands covered by the
Leases is expressly excluded from this Conveyance.  Notwithstanding anything in
this Conveyance to the contrary, all leasehold rights pertaining to the rights
to operate or receive production from wellbores producing on the date hereof,
and all easements, surface leases, wellbores, sub-surface leases, equipment,
facilities, gathering lines, roads and structures pertaining thereto are
reserved to Assignor for its sole benefit.
 
1.2. Warranty of Title.  Assignor does hereby bind itself and its successors and
assigns to warrant and forever defend all and singular title to the Properties
against the claims and demands of all parties or persons claiming or to claim
the same, or any part thereof, by, through or under Assignor, but not otherwise.
 
1.3. Habendum.  TO HAVE AND TO HOLD the Properties, together with all and
singular the rights and appurtenances thereto in any wise belonging, unto
Assignee and its successors and assigns forever.
 
ARTICLE II
 
MISCELLANEOUS
 
2.1. Assumption.  Assignee hereby assumes and agrees to be bound by all of
Assignor’s obligations under the Leases and Contracts from and after the date
hereof.
 

Conveyance, Assignment and Bill of SalePage 2
884040v.13
 
 

--------------------------------------------------------------------------------

 

2.2. Agreement.  The delivery of this Conveyance shall not affect, enlarge,
diminish, or otherwise impair any of the other representations, warranties,
covenants, conditions, assumptions, indemnities, terms, or provisions of the
Agreement, and all of the other representations, warranties, covenants,
conditions, assumptions, indemnities, terms, and provisions contained in the
Agreement shall survive the delivery of this Conveyance to the extent, and in
the manner, set forth in the Agreement; provided, however, that it is understood
and agreed that all warranties or covenants set forth in this Conveyance are
independent of (and in addition to) any warranties or covenants set forth in the
Agreement.
 
2.3. Further Assurances.  The Parties agree to take all such further actions and
to execute, acknowledge, and deliver all such further documents as are necessary
or useful to more effectively convey, transfer to or vest in Assignee the
Properties or to better enable Assignee to realize upon or otherwise enjoy any
of the Properties or to carry into effect the intent and purposes of the
Agreement and this Conveyance.
 
2.4. Successors and Assigns.  The provisions of this Conveyance shall bind and
inure to the benefit of Assignor and Assignee and their respective successors
and assigns.
 
2.5. GOVERNING LAW.  THIS CONVEYANCE SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF WEST VIRGINIA AS TO ITS EFFECT ON
CONVEYING TITLE TO REAL PROPERTY IN THE STATE OF WEST VIRGINIA, BUT OTHERWISE IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CONFLICTS OF LAW
RULE OR PRINCIPLE THAT MIGHT REFER CONSTRUCTION OF SUCH PROVISIONS TO THE LAWS
OF ANOTHER JURISDICTION.
 
2.6. Exhibits.  All exhibits and schedules attached hereto are hereby made a
part hereof and incorporated herein by this reference.  References in such
exhibits and schedules to instruments on file in the public records are notice
of such instruments for all purposes.  Unless provided otherwise, all recording
references in such exhibits and schedules are to the appropriate records (the
real property records, oil and gas records, or other appropriate records) of the
counties in which the Property is located.
 
2.7. Captions.  The captions and article and section numbers in this Conveyance
are for convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Conveyance.
 
2.8. Counterparts.  This Conveyance may be executed in one or more originals,
but all of which together shall constitute one and the same instrument.  To
facilitate recordation and to avoid unduly burdening the public records, in any
particular counterpart of this Conveyance portions of the Exhibits attached
hereto which describe property situated in counties other than the county in
which such counterpart is to be recorded may have been omitted.  An executed
original of this Conveyance containing complete copies of all Exhibits is being
filed of record in Tyler County, West Virginia.
 
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
 

Conveyance, Assignment and Bill of Sale Page 3
 
884040v.13
 
 

--------------------------------------------------------------------------------

 

This Conveyance is executed on the date set forth above.
 
ASSIGNOR:
 
TRANS ENERGY, INC.,
 
a Nevada corporation
 
By:                                                                       
 
Name:                                                                       
 
Its:                                                                       
 

 
PRIMA OIL COMPANY, INC.,
 
a Delaware corporation
 
By:                                                                       
 
Name:                                                                       
 
Its:                                                                       
 

 
ASSIGNEE:
 
REPUBLIC ENERGY VENTURES, LLC,
 
a Delaware limited liability company
 
By:                                                                       
 
Name:                                                                       
 
Its:                                                                                 
 

Conveyance, Assignment and Bill of Sale Page 4
 
884040v.13
 
 

--------------------------------------------------------------------------------

 

THE STATE OF TEXAS                                                      §
 
 §
 
COUNTY OF DALLAS                                           §
 
This instrument was acknowledged before me on this _____ day of ___________,
2010, by ________________, as _______________ of Republic Energy Ventures, LLC,
a Delaware limited liability company, on behalf of said limited liability
company.
 

 
Notary Public, State of Texas
 
My Commission Expires: ___________
 

Conveyance, Assignment and Bill of Sale Page 5
 
884040v.13
 
 

--------------------------------------------------------------------------------

 

THE STATE OF ______                                           §
 
§
 
COUNTY OF ______                                           §
 
This instrument was acknowledged before me on this _____ day of _______________,
2010, by _______________________, as ____________________ of Trans Energy, Inc.,
a Nevada corporation, on behalf of such corporation.
 

 
Notary Public, State of ________
 

Conveyance, Assignment and Bill of Sale Page 6
 
884040v.13
 
 

--------------------------------------------------------------------------------

 

THE STATE OF ______                                           §
 
§
 
COUNTY OF ______                                           §
 
This instrument was acknowledged before me on this _____ day of _______________,
2010, by _______________________, as ____________________ of Prima Oil Company,
Inc., a Delaware corporation, on behalf of such corporation.
 

 
Notary Public, State of ________
 

 

Conveyance, Assignment and Bill of Sale Page 7
 
884040v.13
 
 

--------------------------------------------------------------------------------

 

EXHIBIT A
 
Attached to and made a part of that certain Conveyance, Assignment and Bill of
Sale by and among Assignee and Assignor, and dated ____________.  Unless
provided otherwise, all Volume and Page references below are to the land title
records (real property records, oil & gas records or other appropriate records)
of the county indicated.  References in the chart below to any well(s) or
unit(s) are not intended as a limitation or restriction on the interests
conveyed in any oil, gas or mineral leases, fee interests or other Properties
that may relate to such well(s) or unit(s).
 

 

 

Conveyance, Assignment and Bill of Sale Exhibit B-1
 
884040v.13
 
 

--------------------------------------------------------------------------------

 

 
OVERRIDING ROYALTY ASSIGNMENT
 
THE STATE OF WEST VIRGINIA                                   § 
 
COUNTY OF WETZEL                                                      §
 
This Overriding Royalty Assignment (“Assignment”) is executed as of this 16th
day of July, 2010 by Trans Energy, Inc., a Nevada corporation (herein called
“Assignor”), and Republic Energy Ventures, L.L.C., a Delaware limited liability
company (herein called “Assignee”), having an address of 4925 Greenville Avenue,
Suite 1050, Dallas, Texas 75206.  Assignor and Assignee each may be referred to
in this Assignment individually as a “Party” and collectively as the “Parties.”
 
Background
 
Pursuant to that certain Agreement of Sale and Purchase dated July 16, 2010 (as
amended, supplemented or otherwise modified from time to time, the “Agreement”),
by and between Assignor and Assignee, Assignor has agreed to grant, transfer,
bargain, sell, convey, assign and deliver the Properties (as defined below) to
Assignee, and Assignee has agreed to purchase and acquire such Properties from
Assignor.
 
By the terms of those certain Assignments and Bill of Sale listed on Exhibit A,
attached hereto and incorporated herein by reference (the “Subject
Assignments”), Assignor has assigned to Assignee undivided 50% working interests
with corresponding 40% net revenue interests in and to the various oil, gas and
mineral leases and wellbores therein described and as described on Exhibit B
attached hereto and incorporated herein by reference.
 
It was and is the intent of Assignor and Assignee that the difference between
the 40% net revenue interest assigned to Assignee and the net revenue interest
attributable to Assignor’s working interest in such leases and wellbores
immediately prior to giving effect to the Subject Assignments (proportionately
reduced to the 50% working interest assigned to Assignee) was retained as an
overriding royalty interest burdening the 50% working interest assigned to
Assignee, and such reserved interests are referred to herein as the “Retained
ORRI’s.”
 
NOW THEREFORE, in consideration of the foregoing premises, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
 
ARTICLE I
 
GRANTING AND RESERVATION CLAUSES; WARRANTY; ADDENDUM CLAUSE
 
1.1. Grant.  For Ten Dollars ($10.00) and other good and valuable consideration,
the receipt and sufficiency of which each Party hereby acknowledges, Assignor
has granted, transferred, bargained, sold, conveyed, assigned and delivered, and
does hereby grant, transfer, bargain, sell, convey, assign and deliver to
Assignee the Retained ORRI’s as herein defined, and herein sometimes
collectively called the “Properties,” and each Retained ORRI is a “Property.”
 

OVERRIDING ROYALTY ASSIGNMENT
 
884040v.13
 
 

--------------------------------------------------------------------------------

 

1.2. Warranty of Title.  Assignor does hereby bind itself and its successors and
assigns to warrant and forever defend all and singular title to the Properties
against the claims and demands of all parties or persons claiming or to claim
the same, or any part thereof, by, through or under Assignor, but not otherwise.
 
1.3. Habendum.  TO HAVE AND TO HOLD the Properties, together with all and
singular the rights and appurtenances thereto in any wise belonging, unto
Assignee and its successors and assigns forever.
 
ARTICLE II
 
MISCELLANEOUS
 
2.1. Assumption.  Assignee hereby assumes and agrees to be bound by all of
Assignor’s obligations under the Leases and Contracts from and after the date
hereof.
 
2.2. Agreement.  The delivery of this Conveyance shall not affect, enlarge,
diminish, or otherwise impair any of the other representations, warranties,
covenants, conditions, assumptions, indemnities, terms, or provisions of the
Agreement, and all of the other representations, warranties, covenants,
conditions, assumptions, indemnities, terms, and provisions contained in the
Agreement shall survive the delivery of this Conveyance to the extent, and in
the manner, set forth in the Agreement; provided, however, that it is understood
and agreed that all warranties or covenants set forth in this Conveyance are
independent of (and in addition to) any warranties or covenants set forth in the
Agreement.
 
2.3. Further Assurances.  The Parties agree to take all such further actions and
to execute, acknowledge, and deliver all such further documents as are necessary
or useful to more effectively convey, transfer to or vest in Assignee the
Properties or to better enable Assignee to realize upon or otherwise enjoy any
of the Properties or to carry into effect the intent and purposes of the
Agreement and this Conveyance.
 
2.4. Successors and Assigns.  The provisions of this Conveyance shall bind and
inure to the benefit of Assignor and Assignee and their respective successors
and assigns.
 
2.5. GOVERNING LAW.  THIS CONVEYANCE SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF WEST VIRGINIA AS TO ITS EFFECT ON
CONVEYING TITLE TO REAL PROPERTY IN THE STATE OF WEST VIRGINIA, BUT OTHERWISE IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CONFLICTS OF LAW
RULE OR PRINCIPLE THAT MIGHT REFER CONSTRUCTION OF SUCH PROVISIONS TO THE LAWS
OF ANOTHER JURISDICTION.
 
2.6. Exhibits.  All exhibits and schedules attached hereto are hereby made a
part hereof and incorporated herein by this reference.  References in such
exhibits and schedules to instruments on file in the public records are notice
of such instruments for all purposes.  Unless provided otherwise, all recording
references in such exhibits and schedules are to the appropriate records (the
real property records, oil and gas records, or other appropriate records) of the
counties in which the Property is located.
 

 
OVERRIDING ROYALTY ASSIGNMENT

884040v.13
 
 

--------------------------------------------------------------------------------

 

2.7. Captions.  The captions and article and section numbers in this Conveyance
are for convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Conveyance.
 
2.8. Counterparts.  This Conveyance may be executed in one or more originals,
but all of which together shall constitute one and the same instrument.  To
facilitate recordation and to avoid unduly burdening the public records, in any
particular counterpart of this Conveyance portions of the Exhibits attached
hereto which describe property situated in counties other than the county in
which such counterpart is to be recorded may have been omitted.  An executed
original of this Conveyance containing complete copies of all Exhibits is being
filed of record in Tyler County, West Virginia.
 
WITNESS THE EXECUTION HEREOF, as of the date first written above.
 
ASSIGNOR:
 
TRANS ENERGY, INC.,
 
a Nevada corporation
 
By:                                                            
 
Name:                                                            
 
Its:                                                                       
 

 
ASSIGNEE:
 
REPUBLIC ENERGY VENTURES, LLC,
 
a Delaware limited liability company
 
By:                                                                       
 
Name:                                                                       
 
Title:                                                                       
 

 
OVERRIDING ROYALTY ASSIGNMENT

884040v.13
 
 

--------------------------------------------------------------------------------

 

THE STATE OF ______                                             § 
 
COUNTY OF _________                                           §
 
This instrument was acknowledged before me on the ___ day of _______, 2010, by
________________, the ________________ of Trans Energy, Inc., a Nevada
corporation, on behalf of such corporation.
 

 
Notary Public, State of _______
 
My Commission Expires: _________
 

 
THE STATE OF ______                                             § 
 
COUNTY OF _________                                           §
 
This instrument was acknowledged before me on the ___ day of _______, 2010, by
________________, the ________________ of Republic Energy Ventures, LLC, a
Delaware limited liability company, on behalf of such limited liability company.
 

 
Notary Public, State of _______
 
My Commission Expires: _________
 

 

 
OVERRIDING ROYALTY ASSIGNMENT

884040v.13
 
 

--------------------------------------------------------------------------------

 

EXHIBIT A
 
to Overriding Royalty Assignment
 
1.  
Assignment and Bill of Sale dated effective June 16, 2008, from Trans Energy,
Inc. to Republic Partners VII, LLC recorded in Volume 94A, Page 427, Instrument
82767, as corrected by Correction Assignment and Bill of Sale recorded in Volume
98A, Page 508, Instrument 87990 of the Official Records of Wetzel County, West
Virginia.

 
2.  
Assignment and Bill of Sale dated effective July 21, 2008, from Trans Energy,
Inc. to Republic Partners VII, LLC recorded in Volume 95A, Page 1, Instrument
83699, as corrected by Correction Assignment and Bill of Sale recorded in Volume
98A, Page 510, Instrument 87991 of the Official Records of Wetzel County, West
Virginia.

 
3.  
Assignment dated effective December 1, 2008, from Trans Energy, Inc. to Republic
Partners VI, LP recorded in Volume 98A, Page 512, Instrument 87816 of the
Official Records of Wetzel County, West Virginia.

 

 

884040v.13
 
 

--------------------------------------------------------------------------------

 
[teng-exb1.jpg]

 

884040v.13
 
 

--------------------------------------------------------------------------------

 

[teng-exb2.jpg]

884040v.13
 
 

--------------------------------------------------------------------------------

 

[teng-exb3.jpg]

884040v.13
 
 

--------------------------------------------------------------------------------

 

[teng-exb4.jpg]

884040v.13
 
 

--------------------------------------------------------------------------------

 

EXHIBIT C
 
Form of AJDA Amendment
 
FOURTH AMENDMENT TO FARMOUT AND
 
AREA OF JOINT DEVELOPMENT AGREEMENT
 
This Fourth Amendment to Farmout and Area of Joint Development Agreement (this
“Amendment”), executed this ___ day of July, 2010, is executed by Trans Energy,
Inc., a Nevada corporation (“TE”), Sancho Oil and Gas Corporation, Prima Oil
Company, Inc., and Republic Partners VI, LP, a Texas limited partnership (“RE”)
to amend that certain Farmout and Area of Joint Development Agreement by and
between TE and RE dated April 4, 2007, accepted May 2, 2007, as amended by First
Amendment to Farmout and Area of Joint Development Agreement executed May 12,
2009 (the “First Amendment”), and as amended by Second Amendment to Farmout and
Area of Joint Development Agreement dated August12, 2009, by letter amendment
dated July 31, 2009, and by Third Amendment to Farmout and Area of Joint
Development Agreement dated September 17, 2009, and Supplement to Third
Amendment dated April 14, 2010 (the “AJDA”), as follows:
 
1. The “Joint Development Area” is expanded to consist of the entirety of
Wetzel, Marshall, Monongalia, Marion and Tyler Counties, West Virginia, and
Greene County, Pennsylvania.  Each and every well drilled within the “Joint
Development Area” as so amended will count as a well for purposes of fulfilling
the development programs within the relevant years of the development phase
pursuant to paragraph 7 of the AJDA.  The JOA attached as Exhibit C to the AJDA
shall cover a contract area equivalent to such expanded “Joint Development
Area.”  An additional memorandum pursuant to Section 12(h) of the AJDA shall be
executed and recorded to reflect such expansion of the Joint Development Area.
 
2. RE’s assignee, Republic Energy Ventures, LLC, will be acquiring 50% of TE’s
and its affiliates’ interest in certain leases in Marion and Tyler Counties,
West Virginia, pursuant to Purchase and Sale Agreements between TE and RE of
even date herewith.  Such interest shall be treated as if jointly acquired by TE
and RE under Section 8 of the AJDA pursuant to paragraph 3 of the First
Amendment.
 
3. TE consents to the assignment of all rights of RE in the AJDA and all
associated acreage and other assets to Republic Energy Ventures, LLC, a Delaware
limited liability company, effective immediately after the effectiveness of this
Amendment, and TE waives all preferential rights and tag-along rights in
connection with such assignment.  Upon assumption by Republic Energy Ventures,
LLC of all obligations of RE under the AJDA, RE shall be released from all
further obligations under the AJDA.
 
4. The second year development program for the calendar year 2010 shall include
the Whipkey 1H and 2H wells and those of the five (5) additional wells listed on
Exhibit A hereto which TE is able to obtain valid drilling permits for, with
commercially reasonable efforts, by a date to allow sufficient time to build
locations and move equipment in to spud prior to December 31, 2010.  To the
extent that TE is unable, despite the use of commercially reasonable efforts, to
obtain valid drilling permits for any of such five wells within such time,
 

884040v.13
 
 

--------------------------------------------------------------------------------

 

5. then the number of wells within the second year drilling program for 2010
will be reduced by such number of wells as to which the drilling permits were
delayed and the well(s) did not spud prior to December 31, 2010, or the parties
may agree to substitute wells to be part of the second year development program.
 
6. At any time on or after eighteen (18) months from the date hereof (or prior
thereto if the sale is made at net acreage values equal or more than the
“Threshold Amounts” as hereinafter defined), upon a sale by RE of all or part of
its interest within the AJDA, RE shall be entitled to designate its purchaser or
its purchaser’s nominee to succeed TE as operator for all existing or future
wells located on the acreage transferred.
 
7. Paragraph 9 of the AJDA is amended to provide that a sale of equity or
ownership interests in a party to the AJDA will be considered as a sale of
interests by such party in the Joint Development Area for purposes of applying
the right of first refusal and tag-along provisions of paragraph 9.
 
8. For purposes hereof, the “Threshold Amounts” are $12,000.00 per acre for
acreage in Marshall County, West Virginia; $11,000.00 per acre for acreage in
Wetzel County, West Virginia; $8,500.00 per acre for acreage in Marion County,
West Virginia; and $8,800.00 per acre for acreage in Tyler County, West
Virginia.
 
9. The AJDA is amended to replace each occurrence therein of “below the top of
the Huran/Rhinestreet formation” or words of similar import with “below 650 feet
above the top of the Onondaga.”
 
WITNESS THE EXECUTION HEREOF, as of the date first written above.
 
TRANS ENERGY, INC.,
 
a Nevada corporation
 
By:                                                            
 
Name:                                                            
 
Its:                                                                       
 

 
SANCHO OIL AND GAS CORPORATION,
 
a West Virginia corporation
 
By:                                                            
 
Name:                                                            
 
Its:                                                                       
 

 

884040v.13
 
 

--------------------------------------------------------------------------------

 

PRIMA OIL COMPANY, INC.,
 
a Delaware corporation
 
By:                                                            
 
Name:                                                            
 
Its:                                                                       
 

 
REPUBLIC PARTNERS VI, LP,
 
a Texas limited partnership
 
By:       Republic Partners VI GP, LLC,
 
a Texas limited liability company,
 
its general partner
 
By:                                                      
 
John D. Swanson, President
 

 

884040v.13
 
 

--------------------------------------------------------------------------------

 

SCHEDULE 1.2(c)
 
[List of Contracts]
 
Gas Gathering Agreement entered into the 20th day of November, 2009, effective,
however, as of November 1, 2009, by and between Caiman Eastern Midstream LLC and
Trans Energy, Inc.
 

 Schedule 1.2(c)
884040v.13
 
 

--------------------------------------------------------------------------------

 

SCHEDULE 1.2(d)
 
[Surface Rights]
 
None.
 

 Schedule 1.2(d)
884040v.13
 
 

--------------------------------------------------------------------------------

 

SCHEDULE 4.6
 
[Approved Title Exceptions]
 
Reservation by Sancho Oil and Gas Corporation of “Shallow Rights” as defined in
that Partial Assignment of Oil and Gas Leases (Deep Rights Only) from Sancho Oil
and Gas Corporation to Seller dated July __, 2010.
 

 Schedule 4.6
884040v.13
 
 

--------------------------------------------------------------------------------

 

SCHEDULE 4.8
 
[Violations of Law]
 
None.
 

 Schedule 4.8
884040v.13
 
 

--------------------------------------------------------------------------------

 

SCHEDULE 4.11
 
[Consents and Preferential Rights]
 
None.
 

Schedule 4.11
884040v.13
 
 

--------------------------------------------------------------------------------

 

SCHEDULE 6.3(c)(iii)
 

 
[teng-ex6.jpg]

Schedule 6.3(c)(iii)
884040v.13
 
 

--------------------------------------------------------------------------------