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Exhibit 10.1
 
PURCHASE AGREEMENT

THIS AGREEMENT, dated effective as of May 31, 2013, is between DANIEL K. DONKEL
(“Donkel”) and SAMUEL H. CADE (“Cade”)(hereinafter collectively referred to as
"Sellers") and POLAR PETROLEUM (AK) CORP., an Alaska corporation (hereinafter
called "Buyer").
 
Recitations

1.           State of Alaska Oil and Gas Leases ADL 392123, 392124, 392125,
392126, 392127, 392128, 392129, 392130, 392131, 392132, 392133 and 392134,
covering the lands more particularly described on attached Exhibit A
(hereinafter called the “Leases”), are owned by the Sellers as reflected by the
records of the Division of Oil and Gas, Department of Natural Resources of the
State of Alaska; and

2           The Sellers desire to sell and convey the Leases to Buyer, and Buyer
desires to purchase and acquire the Leases from Sellers, all upon the terms and
conditions hereinafter provided for in this Agreement.

IN CONSIDERATION of the above recitals and of the benefits to be derived by each
of the parties to this Agreement, it is hereby agreed as follows:

Agreement

1.           Sale and Purchase:  Subject to the terms and conditions of this
Agreement,
Sellers shall transfer, sell and convey to Buyer, and Buyer shall purchase and
acquire from the Sellers, all of Sellers’ right, title and interest in and to
the Leases.

2.           Purchase Price.  The total purchase price to be paid by the Buyer
for the Leases shall be the sum of One Million One Hundred Thousand Dollars
($1,100,000.00) (the "Purchase Price") shall be paid to the Sellers as follows:

(a)           One Hundred Thousand Dollars ($100,000.00) shall be due and
payable to Sellers at Closing; and

(b)           The remaining One Million Dollars ($1,000,000.00) shall be
evidenced by the Buyer’s execution and delivery to Sellers, at Closing, of its
promissory note (the “Buyer Note”), on the terms and subject to the conditions
as set forth in the form  of the Buyer Note as attached hereto as Exhibit C. The
parties contemplate that amortization of payments under the Buyer Note, assuming
timely payment, will be as set forth in Exhibit D attached hereto.

3.           Sellers’ Representations:  Each of the Sellers (who make the
following representations only to the extent of the interests owned by each of
the Sellers in the Leases) represents, warrants and agrees to and with Buyer
that:

(a)           As of the Closing, the Leases are in full force and effect, and
Sellers have or will have, as of the Closing, fully complied with all of the
terms and provisions thereof which it is obligated to perform for all periods up
to the Closing.  Sellers shall own or otherwise have the right to assign and
convey or cause to be assigned and conveyed the Leases, all of which shall be
free and clear of any liens and encumbrances and provide for a net revenue
interest to Sellers of not less than eighty three and one third percent
(83.33%), prior to reservation of an overriding royalty equal to four percent
(4%) of 8/8ths as provided for herein.

 
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(b)           There is no litigation or governmental investigation or proceeding
pending or, to the knowledge of the Sellers, threatened affecting the Leases or
which would have the effect of restraining or prohibiting any of the
transactions contemplated by this Agreement.

(c)           This Agreement constitutes the valid and binding agreement of
Sellers in accordance with its terms, and all instruments required hereunder to
be executed by Sellers at the Closing shall constitute valid and binding
agreements of Sellers in accordance with their terms.  The execution, delivery
and performance of this Agreement and the transactions contemplated hereby have
been duly and validly authorized by all requisite action on the part of Sellers;

(d)           This Agreement has been duly executed and delivered by the Sellers
and all instruments required hereunder to be delivered by each party at the
Closing shall be duly executed and delivered by the Sellers;

(e)           Sellers have incurred no liability, contingent or otherwise, for
brokers' or finders' fees in respect of this transaction for which Buyer shall
have any responsibility whatsoever;

(f)           Sellers shall not enter into any new agreements or commitments or
incur, or agree to incur, any contractual obligation or liability (absolute or
contingent) affecting or relating to any of the Leases which extend beyond the
Closing except in connection with the consummation of the transactions
contemplated in this Agreement, without the written consent of Buyer; and

(g)           Sellers have relied upon their own independent investigation made
by each of them and their respective representatives, if any, and have made such
investigation of the Leases as deemed appropriate under the circumstances. No
Seller has been given any oral or written representations or assurances from any
other Seller or the Buyer other than as set forth herein.

4.           Buyer's Representations:  The Buyer represents, warrants and agrees
to and with the Sellers that:

(a)           This Agreement constitutes the valid and binding agreement of
Buyer in accordance with its terms, and all instruments required hereunder to be
executed by Buyer at the Closing shall constitute valid and binding agreements
of Buyer in accordance with their terms;

(b)           The execution, delivery and performance of this Agreement and the
transactions contemplated hereby have been duly and validly authorized by all
requisite action on the part of the Buyer.  Buyer has good right and lawful
authority to purchase and pay for the Leases as contemplated by this Agreement;

(c)           This Agreement has been duly executed and delivered by Buyer and
all instruments required hereunder to be delivered by Buyer at the Closing shall
be duly executed and delivered by Buyer;

(d)           Buyer has incurred no liability, contingent or otherwise, for
brokers' or finders' fees in respect of this transaction, for which Sellers
shall have any responsibility whatsoever; and

(e)           Buyer has relied upon his own independent investigation made by
him and his respective representatives, if any, and have made such investigation
of the Leases as deemed appropriate under the circumstances. Buyer has not been
given any oral or written representations or assurance from Sellers other than
as set forth herein.

(f)           Buyer acknowledges that it has reviewed and analyzed each of the
Leases and that it is aware of, and understands, the rental amounts which may be
due and owning during each year of the term of each of the Leases. For
informational purposes, Exhibit E is attached hereto which sets forth, by rental
due date (to the extent known), the aggregate amount of annual rental payments
believed to be due and payable on the Leases in 2014 and 2015.

 
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5.           Sellers’ Conditions of Closing:  The obligations of Sellers under
this Agreement are subject, at the option of Sellers, to the satisfaction at or
prior to the Closing of the following conditions:

(a)           All representations and warranties of Buyer contained in this
Agreement shall be true in all material respects at and as of the Closing as if
such representations and warranties were made at and as of the Closing; and

(b)           Buyer shall have performed and satisfied all agreements required
by this Agreement to be performed and satisfied by Buyer at or prior to the
Closing, including payment on or at Closing of that portion of the Purchase
Price which Buyer is obligated to pay as set forth in Section 9(a) below.

Should the above conditions not be satisfied to Sellers’ satisfaction as of the
Closing, the Sellers may terminate this Agreement without further obligation
and/or liability between the Sellers and/or the Buyer.

6.           Buyer's Conditions of Closing:  The obligations of Buyer under this
Agreement are subject, at the option of Buyer, to the satisfaction at or prior
to the Closing of the following conditions:

(a)           All representations and warranties of Sellers contained in this
Agreement shall be true in all material respects at and as of the Closing as if
such representations and warranties were made at and as of the Closing; and

(b)           Sellers shall have performed and satisfied all agreements required
by this Agreement to be performed and satisfied by Sellers at or prior to the
Closing.

Should the above conditions not be satisfied to Buyer's satisfaction as of the
Closing, Buyer shall, as its sole and exclusive remedy, terminate this Agreement
without further obligation and/or liability between the Buyer and/or the
Sellers.

7.           Closing:  Unless extended pursuant to the terms of this Agreement,
the closing of this transaction (the “Closing”) shall be held on or before June
14, 2013, commencing at 1:00 pm, at the offices of Allen & Vellone, P.C., 1600
Stout Street, Suite 1100, Denver, Colorado 80202, or at such other place and
time as mutually agreed to by the parties. The actual date on which the Closing
occurs shall be known as the “Closing Date.”

8.           Termination:  This Agreement and the transactions contemplated
hereby may be terminated (a) by the mutual written consent of Buyer and Sellers;
(b) by Sellers if any of the conditions set forth in Section 5 have not been
satisfied in all material respects or waived by the Closing Date; (c) by Buyer
if any of the conditions set forth in Section 6 have not been satisfied in all
material respects or waived by the Closing Date; or (d) unless the Parties agree
to extend the Closing Date beyond June 14, 2013, by either Buyer or Sellers if
the Closing shall not have been consummated on or before June 14, 2013,
provided, however, that the right to terminate this Agreement pursuant to this
Section 8(d) shall not be available to any Party whose failure to fulfill any
obligation under this Agreement shall have been the cause, or shall have
resulted in, the failure of the Closing to occur prior to such date.  Upon
termination of this Agreement as provided herein, all obligations of the Parties
hereto shall cease and terminate and be without any further force and effect.

9.           Actions at Closing.  At the Closing, the following shall occur,
each being a condition precedent to the others and each being deemed to have
occurred simultaneously with the others:

                      (a)           The Buyer shall pay One Hundred Thousand
Dollars ($100,000.00) by wire transfer of immediately available funds to such
account(s) and in accordance with wire transfer instructions provided herein,
with said amount being allocated between and among the Sellers as follows:

(i)           Samuel H. Cade:                                $75,000.00; and
(ii)           Daniel K. Donkel:                                $25,000.00.

 
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Unless otherwise jointly designated in writing by the Sellers, the Sellers
hereby authorize that the foregoing payment, and any and all payments due under
the Buyer Note, shall be made by Buyer pursuant to the following wire transfer
instructions:

Bank: name:                           First Citizens Bank
701 17th Street
Denver, Colorado 80202
ABA Routing No.:               102089644
Account Name:                     Allen & Vellone, P.C. COLTF Trust Account

(b)           The Buyer shall execute and deliver to Daniel K. Donkel, for and
on behalf of the Sellers, the Buyer Note, in the form and substance as set forth
in Exhibit C attached hereto, pursuant to the terms of Section 2(b) above;

(c)           The Buyer shall execute, acknowledge (where applicable) and
deliver,  or cause to be executed, acknowledged (where applicable) and
delivered, to Daniel K. Donkel, for and on behalf of the Sellers, four (4)
copies of an Assignment in the form attached as Exhibit B (or then approved
Assignment form) transferring one hundred percent (100%) of the record title in
and to State of Alaska Oil and Gas Lease ADL 392131, 392133 and 392134 from
Sellers to Buyer, but reserving to Sellers (in the proportions of twenty five
percent (25%) to Donkel and seventy five percent (75%) to Cade), an overriding
royalty equal to four percent (4%) of 8/8ths free and clear of all costs and
expenses of production, which overriding royalty shall also apply to all
renewals and extensions of the subject Leases;

(d)           As collateral and security for its performance under the terms of
this Agreement and in accordance with the terms of a Document Escrow Agreement
executed by the parties, the Buyer shall execute, acknowledge (where applicable)
and deliver, or cause to be executed, acknowledged (where applicable) and
delivered, to Allen & Vellone, P.C., as escrow agent, four (4) copies of an
Assignment in the form attached as Exhibit B (or then approved Assignment form)
whereby the Buyer shall re-assign and re-convey to the Sellers one hundred
percent (100%) of the record title in and to State of Alaska Oil and Gas Lease
ADL 392131, 392133 and 392134, subject to the reservation to Sellers (in the
proportions of twenty five percent (25%) to Donkel and seventy five percent
(75%) to Cade), an overriding royalty equal to four percent (4%) of 8/8ths free
and clear of all costs and expenses of production.
 
(e)           At the Closing and thereafter as may be necessary, all of the
parties hereto shall, without further consideration, execute, acknowledge and
deliver such other instruments or documents and shall take such other action as
may be necessary to carry out their respective obligations under this Agreement.

10.           Execution and Delivery of Lease Assignments.

(a)           Promptly upon receipt of the executed Buyer Note as provided for
in Section 9(b) above and receipt of the four (4) copies of the Assignments
executed and acknowledged by Buyer pursuant to Section 9(c) above,  the Sellers
shall execute, acknowledge (where applicable), deliver and file with the
Division of Oil and Gas, Department of Natural Resources of the State of Alaska,
or cause to be executed, acknowledged (where applicable), delivered and filed
with the Division of Oil and Gas, Department of Natural Resources of the State
of Alaska, the subject Assignments executed and acknowledged by Buyer and
Sellers as provided for herein.

(b)           Upon receipt of the final payment due on the Buyer Note as
provided for in Section 2(b) above, and provided that the Buyer has fully and
timely paid any and all annual lease payments due on all of the Leases, the
Sellers shall prepare and deliver to Buyer for its execution and acknowledgement
(where applicable) four (4) copies of Assignments for each of the Leases (except
for Alaska Oil and Gas Lease ADL 392131, 392133 and 392134) in the form attached
as Exhibit B (or then approved Assignment form) transferring 100% of the record
title to the subject Leases from Sellers to Buyer, or the Buyer’s designee, but
reserving to Sellers (in the proportions of twenty five percent (25%) to Donkel
and seventy five percent (75%) to Cade), an overriding royalty equal to four
percent (4%) of 8/8ths free and clear of all costs and expenses of production,
which overriding royalty shall also apply to all renewals and extensions of all
of the subject Leases. The Buyer shall return all of the executed and
acknowledged Assignments to Daniel K. Donkel, for and on behalf of the Sellers,
whereupon the Sellers shall execute, acknowledge (where applicable), deliver and
file with the Division of Oil and Gas, Department of Natural Resources of the
State of Alaska, or cause to be executed, acknowledged (where applicable),
delivered and filed  with the Division of Oil and Gas, Department of Natural
Resources of the State of Alaska (as applicable), the subject Assignments as
executed by Buyer and the Sellers.

 
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11.           Post-Closing Obligations of Buyer.  After the Closing, the Buyer
covenants and agrees to do the following:

(a)           Buyer or its designee shall assume all obligations of Sellers
under the Leases for all periods from and after the date of Closing, including
the obligation to timely pay all annual rental payments thereafter due under all
Leases. Buyer or its designee shall, at least thirty (30) days in advance of a
rental payment due date (15 days in advance of a rental payment due date if the
Buyer Note is paid in full), pay any and all annual rental amounts due and owing
under the Leases, and shall promptly provide the Sellers with written notice and
document(s) evidencing the payment of such annual rental payments.

(b)           Promptly after the final payment due on the Buyer Note payable to
Sellers as executed and delivered pursuant to Section 9(b) above, the Buyer
shall provide the Sellers with written instructions as to whether the
Assignments to be executed and delivered by the Sellers with respect to the
Leases are to be issued into the name of the Buyer or a Buyer’s designee
together with all applicable information necessary to complete said Assignments.
If Buyer fails to provide such written instructions within three (3) weeks after
the final payment made on the Buyer Note, the Sellers shall be authorized to
execute and deliver the Assignments with respect to the Leases into the name of
only the Buyer.

(c)           After the Buyer receives Assignments from the Sellers with respect
to the Leases as provided for in subsection (b) above, the Buyer agrees to
continue to pay annual rental amounts due on any and all of the Leases and to
provide written notice and evidence of such payments to the Sellers not later
than fifteen (15) days prior to the rental payment due date. If the  Buyer has
not paid the annual rental amount on any Lease within fifteen (15) days prior to
the rental payment due date, then Sellers (or any one of the Sellers) shall have
the right, but not the obligation, to pay the annual rental amount(s) due on the
subject Lease(s) and, in the event of Sellers payment of any such rental
amount(s), Sellers shall provide written notice and evidence of such payment to
Buyer, and Buyer shall be specifically obligated to execute and deliver to
Sellers, or their designee(s), within seven (7) days of Buyer’s receipt of
Sellers’ notice, four (4) original sets of Assignments of the subject Leases to
the Sellers, free and clear of all liens and encumbrances except the overriding
royalties created by this Agreement, such Assignment to be on a DNR approved
form and reasonably acceptable to Sellers or their designee(s). In the event
that Buyer fails to timely deliver to the Sellers the appropriate Assignments of
the Lease(s) as required under this subsection, Buyer shall be obligated to pay
Sellers, as liquidated damages, $100.00 per day for each day the Buyer is
obligated but fails to execute and deliver the required assignments. The
foregoing per day amount payable to Sellers shall be considered liquidated
damages by the parties as it is agreed that actual damages to Sellers for
Buyer’s failure to execute and deliver the assignment are difficult to ascertain
with certainty and that the payment provided herein is a reasonable estimate of
such damages.

(d)           In the event that any of the Leases terminate due to Buyer’s
failure to pay annual rentals in accordance with Sections 11(a) and 11(c), and
Buyer or an Affiliate of Buyer, directly or indirectly, acquires an interest in
all or any portion(s) of any reconfigurations of land described in the subject
Leases in the first State of Alaska oil and gas lease sale after termination,
whether or not all of said lands are offered in the same lease sale, then Buyer
hereby covenants and agrees to transfer to the Sellers (in the proportions of
twenty five percent (25%) to Donkel and seventy five percent (75%) to Cade) an
aggregate two percent (2%) overriding royalty interest in such lease(s).
Notwithstanding anything to the contrary, this shall be the sole and exclusive
remedy to Sellers related to any terminated Leases as referenced herein. For
purposes of this Agreement, “Affiliate” shall mean, with respect to a Party, any
company or legal entity which (i) controls either directly or indirectly such
Party, (ii) which is controlled directly or indirectly by such Party, or (iii)
is directly or indirectly controlled by a company or entity which directly or
indirectly controls such Party.  “Control” means the right to exercise fifty
percent (50%) or more of the voting rights in the appointment of the directors,
members or similar governing body of such company.

(e)           During the period from Closing until the date on which the Buyer
Note is paid in full, the Buyer covenants and agrees, unless specifically
waived, or consented to, by Sellers in writing, as follows: (i) Buyer will not
sell, farmout, encumber, lease, transfer, license, grant an option to purchase
or preferential purchase right with respect to, dispose of, or otherwise burden
or grant additional overriding royalty interests on any of the Leases; and (ii)
Buyer shall promptly notify Sellers upon receipt of notice of any dispute or
claim relating to any of the Leases.

(f)            Upon written request made by Sellers while the Buyer Note remains
unpaid, the Buyer shall promptly (in no event more than thirty (30) days from
receipt of the written request) execute and deliver to the Sellers such
documents or instruments which secures payment of the Buyer Note (including,
without limitation, a Mortgage, security agreement or other collateral
document), in form and substance satisfactory to Sellers, and shall perform all
such acts and things as Sellers may from time to time reasonably request or as
may be necessary or appropriate to establish and maintain a mortgage and/or
collateral or security interest in and to ADL 392131, 392133 or 392134 for the
benefit and use of the Sellers and to secure payment of the Buyer Note.

 
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(g)           The Buyer agrees to execute, acknowledge (where applicable) and
deliver to, or cause to be executed, acknowledged (where applicable) and
delivered to, Allen & Vellone, P.C., as escrow agent under the Document Escrow
Agreement executed by the parties, four (4) copies of new, replacement
Assignments as referenced in Section 9(d) above.  These new Assignments shall be
executed, acknowledged and delivered by Buyer in intervals of no more than every
75 days until the Buyer Note is fully paid. The new Assignments shall replace
the last set of Assignments executed and delivered pursuant to this subsection.
The parties acknowledge and agree that this provision is intended to insure that
Assignments held in escrow are always in current approved form and that the
Assignments have been executed by Buyer within the last 90 days in compliance
with applicable Alaska Division of Oil & Gas policies and procedures. In the
event that Buyer fails to timely deliver to the Sellers the appropriate new
Assignments as required under this subsection, Buyer shall be obligated to pay
Sellers, as liquidated damages, $100.00 per day for each day the Buyer is
obligated but fails to execute and deliver the required assignments. The
foregoing per day amount payable to Sellers shall be considered liquidated
damages by the parties as it is agreed that actual damages to Sellers for
Buyer’s failure to execute and deliver the assignment are difficult to ascertain
with certainty and that the payment provided herein is a reasonable estimate of
such damages.
 
 
12.           Post-Closing Obligations of Sellers.  After the Closing, the
Sellers covenant and agree to do the following:

(a)           Upon release from the escrow account to them of the Assignments
executed and delivered by Buyer pursuant to Section 9(d) above, the Sellers
shall hold such Assignments until the earlier of: (i) the date when all amounts
due under the Buyer Note have been paid in full, or (ii) the date when an event
of default by the Buyer exists under the terms and provisions of this Agreement.
Upon an event occurring under subsection (i) herein, the Sellers shall either
destroy the subject Assignments and provide written notice to Buyer of
destruction of the subject Assignments, or return the subject Assignments to the
Buyer. Upon an event occurring under subsection (ii) herein, the Sellers shall
have the right to deliver and file the subject Assignments with the Division of
Oil and Gas, Department of Natural Resources of the State of Alaska, as if such
Assignments had been executed and delivered by Buyer as required by the
provisions of Section 14(b)(i)(aa) below and thereby cause the re-conveyance
from the Buyer to the Sellers of the ownership rights in and to all of the
subject Leases referenced in such Assignments.  If for any reason the Division
of Oil and Gas, Department of Natural Resources of the State of Alaska will not
file, or otherwise refuses to file, the subject Assignments held by Sellers as
provided for herein, the Buyer shall continue to be obligated to comply with,
and abide by, the terms and provisions of Section 14(b)(i)(aa) and Section 15(l)
below.

13.           Limitation of Liability; Indemnification. If a Seller has properly
executed, acknowledged and delivered any and all Assignments attributable to his
interest in the Leases and otherwise performed all obligations imposed on him
pursuant to this Agreement, the Buyer shall not have any claim or remedy against
such Seller. Each Seller (the “Indemnitor”) shall indemnify and hold the other
Seller harmless with respect to any claim, damage, liable and cost or expense
(including reasonable attorney’s fees) attributable to any act, omission or
other conduct of the Indemnitor in connection with this Agreement.

14.           Events of Default and Remedies.

(a)           Events of Default.  The occurrence of any one or more of the
following events shall constitute an event of default (“Event of Default”)
hereunder:

(i)           If the Buyer fails to pay any installment amount due and payable
under the Buyer Note within ten (10) of its due date;

(ii)           If the Buyer fails to timely pay any annual rental payment due on
the Leases as provided for in Section 11(a) and/or Section 11(c) above;

(iii)           Any warranty, representation or statement made or furnished by
one party to another party herein proves to have been false or incorrect in any
material respect when made or furnished;

 
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(iv)           Except as otherwise provided for herein, the sale, transfer,
assignment of a Lease by the Buyer, the grant of any lien, encumbrance or
additional burden on a Lease by the Buyer, or the making of any levy, seizure or
attachment of a Lease;

(v)           The failure by any party to this Agreement to perform or comply
with any non-monetary obligation imposed upon it pursuant to this Agreement,
which failure shall continue for a period of fifteen (15) days after receipt of
written notice thereof from the non-defaulting party. If, prior to the
expiration of such fifteen (15) day period, the defaulting party shall have
cured such default, or if the default can not be cured within fifteen (15) days,
the defaulting party shall have in good faith commenced and be diligently
proceeding to cure, and shall cure, such default within forty five (45) days,
then such party shall not be deemed to be in default; and

(vi)           The Buyer shall (1) dissolve or terminate its existence, (2)
apply for or consent to the appointment of a receiver, trustee or liquidator of
itself or for its property, (3) be unable, or admit in writing its inability, to
pay its debts as they mature, (4) make a general assignment for the benefit of
creditors, (5) be adjudicated as bankrupt or insolvent, or (6) have filed a
voluntary petition in bankruptcy, or a petition or answer seeking reorganization
or an arrangement with creditors or seeking to take advantage of any insolvency
law, or an answer admitting the material allegations of a petition filed against
it in any bankruptcy, reorganization or insolvency proceeding, or take any other
action for the purpose of effecting any of the foregoing.

(b)           Remedies.  Upon the occurrence of an Event of Default or at any
time thereafter, the non-defaulting party may pursue any and all rights or
remedies available to it, whether at law, in equity, by statute or otherwise, to
enforce collection of all amounts and/or performance of all other obligations
due and owing to it. If they are the non-defaulting party, the Sellers may
pursue any and all of the foregoing rights and remedies and may further pursue
other specific remedies including, without limitation, the following:

(i)           If an Event of Default arises under Section 14(a)(i), Section
14(a)(ii) or Section 14(a)(iii) above, the Sellers may, at their option and
without notice and in addition to any other right or remedy available,
accelerate any and all unpaid amounts due and owing under the Buyer Note which
shall thereafter be immediately due and payable together with default interest
thereon. Thereafter, the Sellers may pursue, at their option and sole
discretion, one, more and/or all of the following rights and remedies:

(aa)           Upon thirty (30) days advance written notice to the Buyer, the
Buyer shall execute and deliver to Sellers, or their designee(s), within seven
(7) days of Buyer’s receipt of Sellers’ notice, four (4) original sets of
Assignments in the form attached hereto as Exhibit B (or then approved
Assignment form) transferring all right, title and interest in ADL 392131,
392133 and 392134 from Buyer to Sellers, free and clear of all liens and
encumbrances except the overriding royalties created by this Agreement. In the
event that Buyer fails to timely deliver to Sellers the appropriate assignments
as required under this subsection, the Sellers shall be entitled to the right of
specific performance to effect the foregoing transfer, assignment and conveyance
by Buyer to Sellers of the said Leases. Buyer shall be obligated to pay Sellers,
as liquidated damages, $100.00 per day for each day the Buyer is obligated but
fails to execute and deliver the required assignments. The foregoing per day
amount payable to Sellers shall be considered liquidated damages by the parties
as it is agreed that actual damages to Sellers for Buyer’s failure to execute
and deliver the assignment are difficult to ascertain with certainty and that
the payment provided herein is a reasonable estimate of such damages.

(bb)           The Buyer shall be specifically obligated to transfer, assign and
deliver to the Sellers any and all geological and geophysical data and
information, any and all non-proprietary seismic data and information, drilling
permits, applications and related documents and all other pertinent information
and data applicable to the subject Leases. The parties acknowledge and agree
that the foregoing right of Sellers to receive data and information applicable
to potential production from the subject Leases is an agreed, bargained for and
acceptable exercise of the Sellers’ security and collateral rights granted and
conveyed by Buyer to Sellers to insure payment of all amounts due and owing
under the Buyer Note and the payment of annual rental amounts due under the
Leases.

 
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(cc)           The Sellers shall, upon thirty (30) days advance written notice
to the Buyer, be entitled to retain, and not be further obligated to convey or
assign to the Buyer, any and all right, title and interest in and to the Leases
which have not yet been transferred and assigned to Buyer as set forth in
Section 10(b) above. The parties acknowledge and agree that the foregoing
retention right with respect to the unassigned Leases is an agreed, bargained
for and acceptable exercise of the Sellers’ security and collateral rights and
remedies granted by Buyer to Sellers to insure payment of all amounts due and
owning under the Buyer Note and satisfaction of Buyer’s other obligations and
agreements set forth herein.

(dd)           The Sellers shall be entitled to retain, and Buyer shall not be
able to recoup or recover by any means, any amount(s) paid on the Buyer Note up
to and including the date when an Event of Default occurred. The parties
acknowledge and agree that the foregoing right of Sellers to retain amounts paid
under the Buyer Note, and not allow any payment(s) to be recouped or recovered
by Buyer, is an agreed, bargained for and acceptable exercise of the Sellers’
security and collateral rights and remedies granted by Buyer to Sellers to
insure payment of all amounts due and owning under the Buyer Note and
satisfaction of Buyer’s other obligations and agreements set forth herein.

(ii)           If an Event of Default arises under any provision of Section
14(a) above, the Seller and/or Buyer may, at its and/or their option and without
notice, pursue any and all other rights and remedies which may be available.

(c)           Remedies Cumulative.  Each and every right, power and remedy
hereunder shall be cumulative and shall be in addition to every other right,
power and remedy now or hereafter existing at law, in equity, by statute or
otherwise. Each and every right, power and remedy may be exercised from time to
time as often and in such order as may be determined by a party, and the
exercise or the beginning of the exercise of any right, power or remedy shall
not be construed to be a waiver of the right to exercise at the same time or
thereafter any other right, power or remedy. No delay or omission by a party in
the exercise of any right, power or remedy shall impair any such right, power or
remedy or be construed to be a waiver of any default or to be an acquiescence
therein.

(5)           Attorney’s Fees.  In the event of any litigation between the
parties concerning enforcement of, or remedies under, the terms of this
Agreement, the court shall award the prevailing party its costs and expenses,
including reasonable attorney’s fees, incurred in connection with such
litigation.

15.           Miscellaneous:

(a)           Governing Law.  This Agreement and all instruments executed in
accordance with it shall be governed by and interpreted in accordance with the
laws of the State of Alaska, without regard to conflict of law rules that would
direct application of the laws of another jurisdiction.

(b)           Entire Agreement.  This Agreement constitutes the entire agreement
between the parties and supercedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties.  No
supplement, amendment, alteration, modification or waiver of this Agreement
shall be binding unless executed in writing by the parties hereto.

(c)           Survival.  The terms and provisions of Section 2(b) and Sections 8
through 15 shall survive the Closing.  All other terms and provisions of this
Agreement shall terminate two (2) years following the Closing Date.

(d)           Waiver.  No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.

 
8

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(e)           Captions.  The captions in this Agreement are for convenience only
and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.

(f)           Assignment.  Prior to the Closing, no party hereto shall assign
this Agreement or any of its rights or obligations hereunder without the prior
written consent of the other parties, and any assignment made without such
consent shall be void ab initio.  Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective permitted heirs, successors and assigns.

(g)           Notices.  Any notice provided or permitted to be given under this
Agreement shall be in writing, and may be served by personal delivery or by
depositing same in the mail, addressed to the party to be notified, postage
pre-paid, and registered or certified with a return receipt requested.  Notice
deposited in the mail in the manner hereinabove described shall be deemed to
have been given and received on the date of the delivery as shown on the return
receipt.  Notice served in any other manner shall be deemed to have been given
and received only if and when actually received by the addressee.  For purposes
of notice, the addresses of the parties shall be as follows:

Sellers’ Mailing Address:

Daniel K. Donkel
3000 North Atlantic Ave., 6th Floor
Daytona Beach, Florida 32118

Samuel H. Cade
3410 Amberwood Lane
Prosper, TX 75078

Buyer's Mailing Address:

Polar Petroleum (AK) Corp.
4300 B Street, Suite 505
Anchorage, Alaska 99503

Escrow Agent’s Mailing Address:

Allen & Vellone, P.C.
1600 Stout Street, Suite 1100
Denver, Colorado 80202
Attn.: Patrick J. Russell

Each party shall have the right, upon giving ten (10) days' prior notice to the
other in the manner hereinabove provided, to change its address for purposes of
notice.

(h)           Expenses.  Except as otherwise provided herein, each party shall
be solely responsible for all expenses incurred by it in connection with this
transaction.

(i)           No Partnership.  Nothing contained in this Agreement shall be
deemed to create a joint venture, partnership or agency relationship between the
Parties.

 
9

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(j)           Time of Essence.  Time is of the essence in the performance of
this Agreement.

(k)           Joint Preparation.  This Agreement shall be deemed for all
purposes to have been prepared through the joint efforts of the parties hereto
and shall not be construed for or against one party or any other party as a
result of the preparation, submittal, drafting, execution or other event of
negotiation hereof.

(l)           Further Assurances.  All of the parties hereto shall, without
further consideration, execute, acknowledge and deliver such other documents and
instruments and take such other action as may be necessary to carry out their
obligations under this Agreement.

(m)           Severability.  If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced under any rule of law, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in a materially adverse manner with respect
to either party.

(n)           Counterpart Execution.  For the sake of simplicity in execution,
this Agreement may be executed by original or telefax signature in any number of
counterparts, each of which shall be deemed an original hereof.  All
counterparts of this Agreement which are executed by telefax signature shall be
valid and binding as original signatures for all purposes (evidentiary or
otherwise).

EXECUTED as of the respective acknowledgment dates of the signatory parties;
effective as of the date first above mentioned.

___           /s/ Daniel K. Donkel_____________________
DANIEL K. DONKEL

___           /s/ Samuel H. Cade_____________________.
SAMUEL H. CADE

SELLERS

POLAR PETROLEUM (AK) CORP.

By__           /s/  Daniel Walker_______________________
Daniel Walker, President

BUYER

 
10

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EXHIBIT A

NORTH POINT THOMSON LEASES

ADL 392123 Legal Description:

Tract 85

T. 010N., R. 024E., Umiat Meridian, Alaska.

Section 3, Protracted, All tide and submerged land shoreward of or located
within the line fixed by coordinates found in Exhibit A of the final decree in
U.S. v. Alaska, No. 84 Original, 106.05 acres;
Section 4, Protracted, All tide and submerged land shoreward of or located
within the line fixed by coordinates found in Exhibit A of the final decree in
U.S. v. Alaska, No. 84 Original, 239.01 acres;
Section 9, Protracted, All, 640.00 acres;
Section 10, Protracted, All, 640.00 acres;

This Tract (85) contains 1,625.06 acres, more or less.

Note:  The final decree in U.S. v. Alaska, No. 84 Original, fixed the offshore
boundary between the United States and the State of Alaska in the Chukchi and
Beaufort Seas. The acreage figures were taken from the State township diagrams
depicting the offshore Federal/State boundary approved by the State of Alaska on
February 28, 1997.

ADL 392124 Legal Description:

Tract 88

T. 010N., R. 024E., Umiat Meridian, Alaska.

Section 15, Protracted, N1/2, S1/2 excluding oil and gas lease ADL 312866,
452.75 acres;
Section 16, Protracted, N1/2, S1/2 excluding oil and gas lease ADL 312866,
408.92 acres;
Section 22, Protracted, E1/2E1/2 excluding oil and gas leases ADL 312866 and ADL
343109, 49.93 acres;

This Tract (88) contains 911.60 acres, more or less.
 
 
ADL 392125  Legal Description:

Tract 94

T. 010N., R. 023E., Umiat Meridian, Alaska.

Section 3, Protracted, All, 640.00 acres;
Section 4, Protracted, All, 640.00 acres;
Section 9, Protracted, N1/2N1/2 excluding oil and gas lease ADL 389730, 42.92
acres;
Section 10, Protracted, N1/2N1/2 excluding oil and gas lease ADL 389730, 50.33
acres;

This Tract (94) contains 1,373.25 acres, more or less.

 
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ADL 392126 Legal Description:

Tract 95

T. 010N., R. 023E., Umiat Meridian, Alaska.

Section 5, Protracted, All, 640.00 acres;
Section 6, Protracted, All, 609.00 acres;
Section 7, Protracted, N1/2N1/2 excluding oil and gas lease ADL 312862, 28.12
acres;
Section 8, Protracted, N1/2N1/2 excluding oil and gas leases ADL 312862 and ADL
389730, 35.90 acres;

This Tract (95) contains 1,313.02 acres, more or less.

ADL 392127 Legal Description:

Tract 102

T. 011N., R. 023E., Umiat Meridian, Alaska.

Section 27, Protracted, All tide and submerged land shoreward of or located
within the line fixed by coordinates found in Exhibit A of the final decree in
U.S. v. Alaska, No. 84 Original, 3.90 acres;
Section 28, Protracted, All tide and submerged land shoreward of or located
within the line fixed by coordinates found in Exhibit A of the final decree in
U.S. v. Alaska, No. 84 Original, 162.94 acres;
Section 33, Protracted, All, 640.00 acres;
Section 34, Protracted, All tide and submerged land shoreward of or located
within the line fixed by coordinates found in Exhibit A of the final decree in
U.S. v. Alaska, No. 84 Original, 520.10 acres;
Section 35, Protracted, All tide and submerged land shoreward of or located
within the line fixed by coordinates found in Exhibit A of the final decree in
U.S. v. Alaska, No. 84 Original, 104.08 acres;

This Tract (102) contains 1,431.02 acres, more or less.

Note:  The final decree in U.S. v. Alaska, No. 84 Original, fixed the offshore
boundary between the United States and the State of Alaska in the Chukchi and
Beaufort Seas. The acreage figures were taken from the State township diagrams
depicting the offshore Federal/State boundary approved by the State of Alaska on
February 28, 1997.
 
 
ADL 392128 Legal Description:

Tract 103

T. 011N., R. 023E., Umiat Meridian, Alaska.

Section 29, Protracted, All tide and submerged land shoreward of or located
within the line fixed by coordinates found in Exhibit A of the final decree in
U.S. v. Alaska, No. 84 Original, 364.22 acres;
Section 30, Protracted, All tide and submerged land shoreward of or located
within the line fixed by coordinates found in Exhibit A of the final decree in
U.S. v. Alaska, No. 84 Original, 436.39 acres;
Section 31, Protracted, All, 607.00 acres;
Section 32, Protracted, All, 640.00 acres;

This Tract (103) contains 2,047.61 acres, more or less.

Note:  The final decree in U.S. v. Alaska, No. 84 Original, fixed the offshore
boundary between the United States and the State of Alaska in the Chukchi and
Beaufort Seas. The acreage figures were taken from the State township diagrams
depicting the offshore Federal/State boundary approved by the State of Alaska on
February 28, 1997.
 
12

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ADL 392129 Legal Description:

Tract 104

T. 010N., R. 022E., Umiat Meridian, Alaska.

Section 1, Protracted, All, 640.00 acres;
Section 2, Protracted, All, 640.00 acres;
Section 11, Protracted, N1/2N1/2 excluding oil and gas leases ADL 312862 and ADL
377017, 17.78 acres;
Section 12, Protracted, N1/2N1/2 excluding oil and gas lease ADL 312862, 23.48
acres;

This Tract (104) contains 1,321.26 acres, more or less.
 
 
ADL 392130 Legal Description:

Tract 105

T. 010N., R. 022E., Umiat Meridian, Alaska.

Section 3, Protracted, All, 640.00 acres;
Section 4, Protracted, All, 640.00 acres;
Section 9, Protracted, N1/2N1/2 excluding oil and gas lease ADL 377017, 7.75
acres;
Section 10, Protracted, N1/2N1/2 excluding oil and gas lease ADL 377017, 12.54
acres;

This Tract (105) contains 1,300.29 acres, more or less.

 
ADL 392131 Legal Description:

Tract 106

T. 010N., R. 022E., Umiat Meridian, Alaska.

Section 5, Protracted, All, 640.00 acres;
Section 6, Protracted, N1/2, N1/2S1/2 excluding oil and gas lease ADL 377016,
608.36 acres;
Section 7, Protracted, N1/2N1/2 excluding oil and gas lease ADL 377016, 0.24
acres;
Section 8, Protracted, N1/2N1/2 excluding oil and gas leases ADL 377016 and ADL
377017, 3.40 acres;

This Tract (106) contains 1,252.00 acres, more or less.
 
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ADL 392132 Legal Description:

Tract 113

T. 011N., R. 022E., Umiat Meridian, Alaska.

Section 25, Protracted, All tide and submerged land shoreward of or located
within the line fixed by coordinates found in Exhibit A of the final decree in
U.S. v. Alaska, No. 84 Original, 452.95 acres;
Section 26, Protracted, All tide and submerged land shoreward of or located
within the line fixed by coordinates found in Exhibit A of the final decree in
U.S. v. Alaska, No. 84 Original, 418.98 acres;
Section 35, Protracted, All, 640.00 acres;
Section 36, Protracted, All, 640.00 acres;

This Tract (113) contains 2,151.93 acres, more or less.

Note:  The final decree in U.S. v. Alaska, No. 84 Original, fixed the offshore
boundary between the United States and the State of Alaska in the Chukchi and
Beaufort Seas. The acreage figures were taken from the State township diagrams
depicting the offshore Federal/State boundary approved by the State of Alaska on
February 28, 1997.

ADL 392133 Legal Description:

Tract 114

T. 011N., R. 022E., Umiat Meridian, Alaska.

Section 27, Protracted, All tide and submerged land shoreward of or located
within the line fixed by coordinates found in Exhibit A of the final decree in
U.S. v. Alaska, No. 84 Original, 522.46 acres;
Section 28, Protracted, All tide and submerged land shoreward of or located
within the line fixed by coordinates found in Exhibit A of the final decree in
U.S. v. Alaska, No. 84 Original, 576.37 acres;
Section 33, Protracted, All, 640.00 acres;
Section 34, Protracted, All, 640.00 acres;

This Tract (114) contains 2,378.83 acres, more or less.

Note:  The final decree in U.S. v. Alaska, No. 84 Original, fixed the offshore
boundary between the United States and the State of Alaska in the Chukchi and
Beaufort Seas. The acreage figures were taken from the State township diagrams
depicting the offshore Federal/State boundary approved by the State of Alaska on
February 28, 1997.

ADL 392134 Legal Description:

Tract 115

T. 011N., R. 022E., Umiat Meridian, Alaska.

Section 19, Protracted, All tide and submerged land shoreward of or located
within the line fixed by coordinates found in Exhibit A of the final decree in
U.S. v. Alaska, No. 84 Original, 43.64 acres;
Section 20, Protracted, All tide and submerged land shoreward of or located
within the line fixed by coordinates found in Exhibit A of the final decree in
U.S. v. Alaska, No. 84 Original, 21.92 acres;
Section 29, Protracted, All tide and submerged land shoreward of or located
within the line fixed by coordinates found in Exhibit A of the final decree in
U.S. v. Alaska, No. 84 Original, 639.89 acres;
Section 30, Protracted, All, 604.00 acres;
Section 31, Protracted, All, 607.00 acres;
Section 32, Protracted, All, 640.00 acres;

This Tract (115) contains 2,556.45 acres, more or less.

Note:  The final decree in U.S. v. Alaska, No. 84 Original, fixed the offshore
boundary between the United States and the State of Alaska in the Chukchi and
Beaufort Seas. The acreage figures were taken from the State township diagrams
depicting the offshore Federal/State boundary approved by the State of Alaska on
February 28, 1997.

 
 
14

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EXHIBIT B

ASSIGNMENT FORM
 
 
 

 
 
 
15

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EXHIBIT C

PROMISSORY NOTE
                                                                                                                            

 $ 1,000,000.00   May 31, 2013    Anchorage, Alaska

 
FOR VALUE RECEIVED, the undersigned, POLAR PETROLEUM (AK) CORP. promises to pay
to the order of SAMUEL H. CADE and DANIEL K. DONKEL (the “Holders”) the
principal sum of ONE MILLION and no/100s Dollars (US $1,000,000.00) together
with interest at the annual rate of three-tenths of one percent (0.30%), which
shall be due and payable to the Holders on the following dates and in the
indicated amounts, unless sooner paid or extended by the Holders:

$125,000 in principal plus accrued interest on the unpaid principal shall be due
and payable on or before September 14, 2013;
$125,000 in principal plus accrued interest on the unpaid principal shall be due
and payable on or before December 14. 2013;
$125,000 in principal plus accrued interest on the unpaid principal shall be due
and payable on or before March 14, 2014;
$125,000 in principal plus accrued interest on the unpaid principal shall be due
and payable on or before June 14, 2014;
$125,000 in principal plus accrued interest on the unpaid principal shall be due
and payable on or before September 14, 2014;
$125,000 in principal plus accrued interest on the unpaid principal shall be due
and payable on or before December 14, 2014;
$125,000 in principal plus accrued interest on the unpaid principal shall be due
and payable on or before March 14, 2015; and
$125,000 in principal plus accrued interest on the unpaid principal shall be due
and payable on or before June 14, 2015 (the “Maturity Date”).

All payments of principal and interest shall be made by wire transfer of
immediately available funds in accordance with the wire transfer instructions
which the Holders authorized and provided in connection with the closing of the
Purchase Agreement dated effective as of May 31, 2013, or shall be made pursuant
to such other wire transfer instructions as the Holders shall jointly designate
in writing. If any date on which a payment of principal and interest is due is a
Saturday, Sunday or legal holiday, the payment shall be due on the next day
which is not a Saturday, Sunday or legal holiday.

AT THE OPTION of the Holders, the payment of all principal and interest due in
accordance with the terms of this Note shall be accelerated and shall
immediately be due and payable, without notice or demand, upon any default in
the payment provided for herein subject to a ten (10) day grace period.

AFTER MATURITY or acceleration, unpaid principal and accrued interest shall bear
interest at the rate of twelve percent (12%) per annum until paid in full. The
undersigned agrees to pay to the Holder on demand all costs and expenses
(including reasonable attorney’s fees), if any, paid or incurred by the Holder
hereof in connection with the enforcement of any of the rights and remedies of
the Holder under this Note.

THE UNDERSIGNED shall have the right to make prepayments of principal in an
amount not less than $100,000 at any time without premium or penalty, provided
that such prepayment shall not defer or postpone the scheduled date of payment
for any remaining installment payment provided for herein.
 
 
THIS NOTE is secured by the terms and provisions set forth under that certain
Purchase Agreement dated effective as of May 31, 2013 by and between the Holders
and the undersigned.

THE UNDERSIGNED hereby waives demand and presentment for payment, notice of
dishonor, protest, notice of acceleration and diligence in collection and
consents to any extension or modification of time for payment or partial payment
of this Note, before, at or after maturity, to the addition or release of any
other party primarily or secondarily liable for the payment of the indebtedness
evidenced by this Note. This Note shall be governed by and construed in
accordance with the laws of the State of Alaska.

EXECUTED on this 31 day of May, 2013.

POLAR PETROLEUM  (AK) CORP.,
an Alaska corporation
 

By /s/ Daniel Walker          
                                                            Daniel Walker,
President

 
 
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EXHIBIT D

AMORTIZATION SCHEDULE

The following amortization schedule is for the $1,000,000.00 promissory note
made by Polar Petroleum (AK) Corp. dated May 31, 2013, payable to Daniel K.
Donkel and Samuel H. Cade, assuming that all payment amounts are timely paid
thereunder:

      Principal                                           
 Interest                                          
 Payment                                      Unpaid
  Date                           Amount                             Amt
(0.30%)                                   
  Amt                                           Principal Amt.

06/14/13*                                                                                                                                      $
1,000,000.00
(Closing)

09/14/13                      $
125,000.00                                           $   750.00*                              $125,750.00*                       
     $    875,000.00

12/14/13                      $
125,000.00                                           $   656.25                                $125,656.25                                $    750,000.00

03/14/14                      $
125,000.00                                           $   562.50                                $125,562.50                                $    625,000.00

06/14/14                      $
125,000.00                                           $   468.75                                $125,468.75                                $    500,000.00

09/14/14                      $
125,000.00                                           $   375.00                                $125,375.00                                $    375,000.00

12/14/14                      $
125,000.00                                           $   281.25                                $125,281.25                                $    250,000.00

03/14/15                      $
125,000.00                                           $   187.50                                $125,187.50                                $    125,000.00

06/14/15                      $
125,000.00                                           $     93.75                                $125,093.75                                $               0.00

*   Assumes 6/14/13 closing. If closing occurs on earlier date, the interest due
on 9/14/13 must be re-calculated and payment amount due on 9/14/13 must also be
adjusted.

 
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EXHIBIT E

SCHEDULE OF RENTAL PAYMENTS

The following provides, by specific dates, the total amount of rental payments
which are due and payable on certain number of Alaska oil and gas leases
containing the indicated total acreage, based on the indicated rental amount per
acre.

A.           Issued Leases.

Rental                           Number
  Due                                 of                      
       Total                                     Rental                   
     Total Rental
  Date             Leases                        Acreage                        
      Rate/Acre                    Payment Amt.

01/01/2014                           6                      
12,190.90                                $  1.50                      $  18,286.35
03/01/2014                           1                         1,373.25                                $  1.50                      $    2,059.88
03/01/2014                           5                         6,098.17                                $10.00                      $  60,981.70

01/01/2015                           6                      
12,190.90                                $  2.00                      $  24,381.80
03/01/2015                           1                         1,373.25                                $  2.00                      $    2,746.50
03/01/2015                           5                         6,098.17                                $10.00                      $  60,981.70

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