STOCK PURCHASE AGREEMENT

BETWEEN

ZULU ENERGY CORP.

AND SWANSI HOLDINGS CORP.

Dated as of December 19, 2007

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TABLE OF CONTENTS     Section        Page    Article I SALE AND PURCHASE OF
SHARES    1       1.1    Sale and Purchase of Shares    1 

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  Article II PURCHASE PRICE AND PAYMENT    1       2.1    Amount of Purchase
Price    1 

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     2.2    Payment of Purchase Price    1 

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  Article III CLOSING AND TERMINATION    2       3.1    Closing Date    2     
 3.2    Termination of Agreement    2       3.3    Procedure Upon Termination   
3       3.4    Effect of Termination    3    Article IV REPRESENTATIONS AND
WARRANTIES OF THE SELLER    3       4.1    Organization and Good Standing of the
Company    3       4.2    Authority    3       4.3    Shares    4       4.4   
Basic Corporate Records    4 

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     4.5    Minute Books    5       4.6    Subsidiaries and Affiliates    5 

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     4.7    Consents    5       4.8    Financial Statements    5 

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     4.9    Records and Books of Account    6       4.10    Absence of
Undisclosed Liabilities    6 

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     4.11    Taxes    6       4.12    Accounts Receivable    8       4.13   
Inventory    8       4.14    Machinery and Equipment    8       4.15    Real
Property Matters    9 

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     4.16    Leases    10       4.17    Patents, Software, Trademarks, Etc   
10       4.18    Insurance Policies    11 

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     4.19    Banking and Personnel Lists    11       4.20    Lists of Contracts,
Etc    12       4.21    Compliance With the Law    13 

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     4.22    Litigation; Pending Labor Disputes    14       4.23    Absence of
Certain Changes or Events    15       4.24    Employee Benefit Plans    16     
 4.25    Product Warranties and Product Liabilities    17       4.26    Assets 
  17 

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4.27    Absence of Certain Commercial Practices    17  4.28    Licenses,
Permits, Consents and Approvals    18 

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4.29    Environmental Matters    18 

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4.30    Broker    19  4.31    Related Party Transactions    19  4.32    Patriot
Act    19 

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4.33    Disclosure    2 

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4.34      Investment
Intent                                                                                                                            
20   4.35      Investment Experience; Suitability   
                                                                                               
20   4.36      Accredited Investor
Status                                                                                                             
20   4.37      Reliance on
Exemptions                                                                                                                 
20   4.38     
Legends                                                                                                                                         
21  

Article V REPRESENTATIONS AND WARRANTIES OF PURCHASER    21       5.1   
Organization and Good Standing    21       5.2    Authority    21       5.3   
Conflicts; Consents of Third Parties    21       5.4    Litigation    22     
 5.5    Investment Intention    22       5.6    Broker    22       5.7   
Patriot Act    22    Article VI COVENANTS    23       6.1    Access to
Information    23       6.2    Conduct of the Business Pending the Closing   
23       6.3    Consents    25       6.4    Other Actions    25       6.5    No
Solicitation    25       6.6    Preservation of Records    26       6.7   
Publicity    26       6.8    Financial Statements    26       6.9    Tax
Matters    26    Article VII CONDITIONS TO CLOSING    28       7.1    Conditions
Precedent to Obligations of Purchaser    28       7.2    Conditions Precedent to
Obligations of the Seller    29       7.3    Conditions Subsequent to Closing   
30    Article VIII DOCUMENTS TO BE DELIVERED    30       8.1    Documents to be
Delivered by the Seller    30       8.2    Documents to be Delivered by the
Purchaser    31    Article IX INDEMNIFICATION    31       9.1   
Indemnification    31       9.2    Limitations on Indemnification for Breaches
of Representations and Warranties    32       9.3    Indemnification Procedures 
  32 

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     9.4    Tax Treatment of Indemnity Payments    33    Article X
MISCELLANEOUS    33       10.1    Payment of Sales, Use or Similar Taxes    33 
     10.2    Survival of Representations and Warranties    34       10.3   
Expenses    34       10.4    Specific Performance    35       10.5    Further
Assurances    35       10.6    Submission to Jurisdiction; Consent to Service of
Process; Attorney’s Fees    35       10.7    Entire Agreement; Amendments and
Waivers    35       10.8    Governing Law    36       10.9    Table of Contents
and Headings    36       10.10 Notices    36       10.11 Severability    37     
 10.12 Binding Effect; Assignment    37 

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STOCK PURCHASE AGREEMENT

     STOCK PURCHASE AGREEMENT, dated as of December 19, 2007 (the “Agreement”),
between Zulu Energy Corp., a corporation existing under the laws of Colorado
(the “Purchaser”) and Swansi Holdings Corp. (the “Seller”).

W I T N E S S E T H:

     WHEREAS, the Seller owns 50 shares of common stock, BPULA 1.00 par value
(the “Shares”) of Nyati Resources Botswana (Proprietary) Limited, a company
limited by shares organized under the laws of the Republic of Botswana (the
“Company”), which Shares constitute 50% of the issued and outstanding shares of
capital stock of the Company;

     WHEREAS, the Company is engaged in the business of prospecting for and the
exploration of coal bed methane and related activities in the Republic of
Botswana including related activities (the “Business”);

     WHEREAS, the Company has no subsidiaries; and

     WHEREAS, the Seller desires to sell to Purchaser, and the Purchaser desires
to purchase from the Seller, the Shares for the purchase price and upon the
terms and conditions hereinafter set forth;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter contained, the parties hereby agree as follows:

ARTICLE I
SALE AND PURCHASE OF SHARES

  1.1 Sale and Purchase of Shares.

     Upon the terms and subject to the conditions contained herein, on the
Closing Date the Seller shall sell, assign, transfer, convey and deliver to the
Purchaser, and the Purchaser shall purchase from the Seller, the Shares of the
Company owned by the Seller as set forth opposite the Seller's name on Annex A
hereto.

ARTICLE II
PURCHASE PRICE AND PAYMENT

  2.1 Amount of Purchase Price.

     The purchase price for the Shares shall be $3,000,000.00 (Three Million
United States Dollars) (the “Purchase Price”).

2.2 Payment of Purchase Price.

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     The Purchaser shall pay the Purchase Price to the Seller in two tranches,
which shall be paid by wire transfer of immediately available funds into an
account designated by the Seller. The first tranche of $1,500,000.00 (the “First
Payment”) shall be payable within thirty (30) business days of the Closing Date.
The second tranche of $1,500,000.00 (the “Second Payment”) shall be payable upon
the earlier of: (a) nine (9) months following the Closing Date; or (b) the
Purchaser raising at least $5,000,000 in gross proceeds from one or more private
placements of equity, debt or a combination thereof. In addition, upon the
closing of the First Private Placement (as hereinafter defined), Purchaser shall
issue to Seller warrants to purchase 15,000,000 shares of common stock (the
“Warrants”), expiring five (5) years from issuance, at an exercise price of
$1.50 per share. The Warrants will have the same other terms and rights
(including but not limited to Registration Rights) as the warrants issued in the
First Private Placement.

ARTICLE III
CLOSING AND TERMINATION

  3.1 Closing Date.

     Subject to the satisfaction of the conditions set forth in Sections 7.1 and
7.2 hereof (or the waiver thereof by the party entitled to waive that
condition), the closing of the sale and purchase of the Shares provided for in
Section 1.1 hereof (the "Closing") shall take place at the offices of Sichenzia
Ross Friedman Ference LLP located at 61 Broadway, New York, New York 10006 (or
at such other place as the parties may designate in writing) on such date as the
Seller and the Purchaser may designate. The date on which the Closing shall be
held is referred to in this Agreement as the "Closing Date".

  3.2 Termination of Agreement.

This Agreement may be terminated prior to the Closing as follows:

     (a) At the election of the Seller or the Purchaser on or after December 31,
2007, if the Closing shall not have occurred by the close of business on such
date, provided that the terminating party is not in default of any of its
obligations hereunder;

     (b) by mutual written consent of the Seller and the Purchaser; or

     (c) by the Seller or the Purchaser if there shall be in effect a final
nonappealable order of a Governmental Body (as defined below) of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated hereby; it being agreed that the parties hereto
shall promptly appeal any adverse determination which is not nonappealable (and
pursue such appeal with reasonable diligence).

                            (i) For purposes of this Agreement, “Governmental
Body” shall mean any agency, public or regulatory authority, department,
commission, court, ministry, or board of government, whether foreign or domestic
and whether national, federal, provincial, state, regional, local or municipal.

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  3.3 Procedure Upon Termination.

     In the event of termination and abandonment by the Purchaser or the Seller,
or both, pursuant to Section 3.2 hereof, written notice thereof shall forthwith
be given to the other party, and this Agreement shall terminate, and the
purchase of the Shares hereunder shall be abandoned, without further action by
the Purchaser or the Seller. If this Agreement is terminated as provided herein,
each party shall redeliver all documents, work papers and other material of any
other party relating to the transactions contemplated hereby, whether so
obtained before or after the execution hereof, to the party furnishing the same.

  3.4 Effect of Termination.

     In the event that this Agreement is validly terminated as provided herein,
then each of the parties shall be relieved of their duties and obligations
arising under this Agreement after the date of such termination and such
termination shall be without liability to the Purchaser or the Seller; provided,
however, that nothing in this Section 3.4 shall relieve the Purchaser or the
Seller of any liability for a breach of this Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Seller hereby represents and warrants to the Purchaser that:

4.1 Organization and Good Standing of the Company.

     The Company is a company limited by shares organized under the laws of the
Republic of Botswana. The Company is not required to be qualified to transact
business in any other jurisdiction where the failure to so qualify would have an
adverse effect on the business of the Company.

4.2    Authority.

       (a) The Company has full power and authority (corporate and otherwise) to
carry on its business and has all permits and licenses that are necessary to the
conduct of its business or to the ownership, lease or operation of its
properties and assets.

       (b) The execution of this Agreement and the delivery hereof to the
Purchaser and the sale and the transactions contemplated herein have been, or
will be prior to Closing, duly authorized by the Seller’s Board of Directors and
by the Seller’s stockholder having full power and authority to authorize such
actions.

       (c) Subject to any consents required under Section 4.7 below, the Seller
has the full legal right, power and authority to execute, deliver and carry out
the terms and provisions of this Agreement. Seller has duly approved and
authorized the execution and delivery of this Agreement and documents and
instruments contemplated hereby and the consummation of the transactions
contemplated hereby and no other proceedings, approvals or other action on the
part of the Seller, the Company is necessary to approve and authorize the
execution, delivery and performance by the Seller of this Agreement and the
documents and instruments

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contemplated hereby or the consummation of the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered on behalf of the
Seller and constitutes a valid and binding obligation of the Seller enforceable
in accordance with its terms.

        (d) Neither the execution and delivery of this Agreement, the
consummation of the transactions herein contemplated, nor compliance with the
terms of this Agreement will violate, conflict with, result in a breach of, or
constitute a default under (i) any Law (as defined below) indenture, mortgage,
loan agreement, or other agreement or instrument to which the Company or the
Seller is a party or by which it or any of them is bound, (ii) any charter,
regulation, or bylaw provision of the Company, or (iii) any decree, order, or
rule of any court or Governmental Body or arbitrator that is binding on the
Company or the Seller in any way.

         (i) For purposes of this Agreement, a “Law” or “Laws” shall mean,
including those applicable of the United States of America, the Republic of
Mauritius and the Republic of Botswana, any statute, common law, rule,
ordinance, regulation, code, licensing requirement, order, judgment, injunction,
decree, license, permit and bylaw of a Governmental Body.

4.3      Shares.     (a) The Company’s authorized capital stock consists of
3,000 shares of  

common stock, of which 50 shares have been issued to Seller, which comprises 50%
of the issued and outstanding stock of the Company and which constitutes the
Shares as defined above. All of the Shares are duly authorized, validly issued,
fully paid and non-assessable.

         (b) The Seller is the lawful record and beneficial owner of all the
Shares, free and clear of any liens, pledges, encumbrances, charges, claims or
restrictions of any kind, and has, or will have on the Closing Date, the
absolute, unilateral right, power, authority and capacity to enter into and
perform this Agreement, including the sale of the Shares, without any other or
further authorization, action or proceeding, except as specified herein.

          (c) There are no authorized or outstanding subscriptions, options,
warrants, calls, rights, contracts, demands, commitments, shareholder
agreements, convertible securities or other agreements or arrangements of any
character or nature whatever under which the Seller or the Company are or may
become obligated to issue, assign or transfer any shares of capital stock of the
Company. Upon the delivery to Purchaser on the Closing Date of the
certificate(s) representing the Shares, Purchaser will have good, legal, valid,
marketable and indefeasible title to 50% of the then issued and outstanding
shares of capital stock of the Company, free and clear of any liens, pledges,
encumbrances, charges, agreements, options, claims or other arrangements or
restrictions of any kind.

  4.4 Basic Corporate Records.

The copy of the Memorandum and Articles of Association of Nyati Botswana
(certified as of the date of this Agreement as true, correct and complete by the
Nyati Botswana’s secretary or assistant secretary), which has been delivered to
the Purchaser, are true, correct and complete as of the date of this Agreement.

  4.5 Minute Books.

     The minute books of the Company, which shall be exhibited to the Purchaser
between the date hereof and the Closing Date, each contain true, correct and
complete minutes and records of all meetings, proceedings and other actions of
the shareholders, Boards of Directors and committees of such Boards of Directors
of each such corporation, if any, and, on the Closing Date, will contain true,
correct and complete minutes and records of any meetings, proceedings and other
actions of the shareholders, respective Boards of Directors and committees of
such Boards of Directors of each such corporation.

  4.6 Subsidiaries and Affiliates.

     The Company has no ownership, voting or profit and loss sharing percentage
interest in any businesses, entities, enterprises and organizations including,
for purposes of clarity, subsidiaries. Except as set forth in Schedule 4.6 or
4.31, (i) the Company has made no advances to, or investments in, nor owns
beneficially or of record, any securities of or other interest in, any business,
entity, enterprise or organization, (ii) there are no arrangements through which
the Company has acquired from, or provided to, the Seller or its affiliates any
goods, properties or services, (iii) there are no rights, privileges or
advantages now enjoyed by the Company as a result of the ownership of the
Company by the Seller which, to the knowledge of the Seller or the Company,
might be lost as a result of the consummation of the transactions contemplated
by this Agreement.

  4.7 Consents.

     Except as set forth in Schedule 4.7, no consents or approvals of any public
body or authority and no consents or waivers from other parties to leases,
licenses, franchises, permits, indentures, agreements or other instruments are
(i) required for the lawful consummation of the transactions contemplated
hereby, or (ii) necessary in order that the Business can be conducted by the
Purchaser in the same manner after the Closing as heretofore conducted by the
Company, nor will the consummation of the transactions contemplated hereby
result in creating, accelerating or increasing any liability of the Company.

  4.8 Financial Statements.

     The Seller has delivered, or will deliver prior to Closing, to the
Purchaser copies of the following financial statements (which include all notes
and schedules attached thereto), all of which are true, complete and correct,
have been prepared from the books and records of the Company in accordance with
United States generally accepted accounting principles (“GAAP”) consistently
applied with past practice and fairly present the financial condition, assets,
liabilities and results of operations of the Company as of the dates thereof and
for the periods covered thereby:

  the audited balance sheet of the Company as at December 31, 2005 and 2006, and
the related audited statements of operations, and of cash flows

 

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       of the Company for the period then ended and (ii) the unaudited balance
sheet of the Company as of September 30, 2007 and the related compiled statement
of operations of the Company for the nine month period then ended (such
statements, including the related notes and schedules thereto, are referred to
herein as the “Financial Statements”).

     In such Financial Statements, the Statements of Operations do not contain
any items of special or nonrecurring income or any other income not earned in
the ordinary course of business except as set forth in Schedule 4.8, and the
financial statements for the interim periods indicated include all adjustments,
which consist of only normal recurring accruals, necessary for such fair
presentation. There are no facts known to the Seller that, under GAAP
consistently applied, would alter the information contained in the foregoing
Financial Statements in any material way. Neither the Company, nor Seller, nor
any director, officer, employee or agent of the Company has received any written
or oral complaint, allegation or claim that the Company has engage in
questionable accounting or business practices.

     For the purposes hereof, the balance sheet of the Company as of September
30, 2007 is referred to as the “Balance Sheet” and September 30, 2007 is
referred to as the “Balance Sheet Date”.

  4.9 Records and Books of Account.

     The records and books of account of the Company and of each Subsidiary
reflect all material items of income and expense and all material assets,
liabilities and accruals, and have been, and to the Closing Date will be,
regularly kept and maintained in conformity with GAAP applied on a consistent
basis with preceding years.

  4.10 Absence of Undisclosed Liabilities.

     Except as and to the extent reflected or reserved against in the Company’s
Financial Statements or disclosed in Schedule 4.10, there are no liabilities or
obligations of the Company of any kind whatsoever, whether accrued, fixed,
absolute, contingent, determined or determinable, and including without
limitation (i) liabilities to former, retired or active employees of the Company
under any pension, health and welfare benefit plan, vacation plan or other plan
of the Company, (ii) tax liabilities incurred in respect of or measured by
income for any period prior to the close of business on the Balance Sheet Date,
or arising out of transactions entered into, or any state of facts existing, on
or prior to said date, and (iii) contingent liabilities in the nature of an
endorsement, guarantee, indemnity or warranty, and there is no condition,
situation or circumstance existing or which has existed that could reasonably be
expected to result in any liability of the Company, other than liabilities and
contingent liabilities incurred in the ordinary course of business since the
Balance Sheet Date consistent with the Company’s recent customary business
practice, none of which is materially adverse to the Company.

4.11      Taxes.   

           (a) For purposes of this Agreement, “Tax” or “Taxes” refers to: (i)
any and all federal, state, local and foreign (including the Republic of
Botswana) taxes,

 

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assessments and other governmental charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes and escheatment payments, together with all interest, penalties
and additions imposed with respect to such amounts and any obligations under any
agreements or arrangements with any other person with respect to such amounts
and including any liability for taxes of a predecessor entity; (ii) any
liability for the payment of any amounts of the type described in clause (i) as
a result of being or ceasing to be a member of an affiliated, consolidated,
combined or unitary group for any period (including, without limitation, any
liability under Treas. Reg. Section 1.1502 -6 or any comparable provision of
foreign, state or local law); and (iii) any liability for the payment of any
amounts of the type described in clause (i) or (ii) as a result of any express
or implied obligation to indemnify any other person or as a result of any
obligations under any agreements or arrangements with any other person with
respect to such amounts and including any liability for taxes of a predecessor
entity.

        (b) (i) The Company has timely filed all federal, state, local and
foreign returns, estimates, information statements and reports (“Returns”)
relating to Taxes required to be filed by the Company with any Tax authority.
All such Returns are true, correct and complete in all respects. The Company has
paid all Taxes shown to be due on such Returns. Except as listed on Schedule
4.11 hereto, the Company is not currently the beneficiary of any extensions of
time within which to file any Returns. The Seller has furnished and made
available to the Purchaser complete and accurate copies of all income and other
Tax Returns and any amendments thereto filed by the Company in the last three
(3) years.

     (ii) The Company, as of the Closing Date, will have withheld and accrued or
paid to the proper authority all Taxes required to have been withheld and
accrued or paid.

     (iii) The Company has not been delinquent in the payment of any Tax nor is
there any Tax deficiency outstanding or assessed against the Company. The
Company has not executed any unexpired waiver of any statute of limitations on
or extending the period for the assessment or collection of any Tax.

     (iv) There is no dispute, claim, or proposed adjustment concerning any Tax
liability of the Company either (A) claimed or raised by any Tax authority in
writing or (B) based upon personal contact with any agent of such Tax authority,
and there is no claim for assessment, deficiency, or collection of Taxes, or
proposed assessment, deficiency or collection from the Internal Revenue Service
or any other Governmental Body against the Company which has not been satisfied.
The Company is not a party to nor has it been notified in writing or otherwise
that it is the subject of any pending, proposed, or threatened action,
investigation, proceeding, audit, claim or assessment by or before the Internal
Revenue Service or any other Governmental Body, nor does the Company have any
reason to believe that any such notice will be received in the future. Neither
he Internal Revenue Service nor any other Governmental Body nor any state or
local taxation authority has ever audited any income tax return of the Company.
The Company has not filed any requests for rulings with the Internal Revenue
Service. No power of attorney has been granted by the Company or its Affiliates
with respect to any matter relating to

 

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Taxes of the Company. There are no Tax liens of any kind upon any property or
assets of the Company, except for inchoate liens for Taxes not yet due and
payable.

     (v) The Company has no liability for any unpaid Taxes which has not been
paid or accrued for, or otherwise, or reserved on the Financial Statements in
accordance with GAAP, whether asserted or unasserted, contingent or otherwise.

     (vi) There is no contract, agreement, plan or arrangement to which the
Company is a party as of the date of this Agreement, including but not limited
to the provisions of this Agreement, covering any employee or former employee of
the Company that, individually or collectively, would reasonably be expected to
give rise to the payment of any amount that would not be deductible pursuant to
Sections 280G, 404 or 162(m) of the Internal Revenue Code of 1986, as amended
(the “Code”). There is no contract, agreement, plan or arrangement to which the
Company is a party or by which it is bound to compensate any individual for
excise taxes paid pursuant to Section 4999 of the Code or any applicable
provision under any Law.

     (vii) The Company has not filed any consent agreement under Section 341(f)
of the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as defined in Section 341(f)(4) of the
Code) owned by the Company.

     (viii) The Company is not a party to, nor has any obligation under any
tax-sharing, tax indemnity or tax allocation agreement or arrangement.

     (ix) None of the Company’s assets are tax exempt use property within the
meaning of Section 168(h) of the Code.

                   4.12 Accounts Receivable.

  The Company has no accounts receivable.

  4.13 Inventory.

The Company has no inventory.

4.14 Machinery and Equipment.

     Except for items disposed of in the ordinary course of business, all
machinery, tools, furniture, fixtures, equipment, vehicles, leasehold
improvements and all other tangible personal property (hereinafter “Fixed
Assets”) of the Company currently being used in the conduct of the Business, or
included in determining the net book value of the Company on the Balance Sheet
Date, together with any machinery or equipment that is leased or operated by the
Company, are in fully serviceable working condition and repair. Said Fixed
Assets shall be maintained in such condition from the date hereof through the
Closing Date. Except as described on Schedule 4.14 hereto, all Fixed Assets
owned, used or held by the Company are situated at its business premises and are
currently used in its business. Schedule 4.14 describes all Fixed Assets owned
by or an interest in which is claimed by any other person (whether a customer,

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supplier or other person) for which the Company is responsible (copies of all
agreements relating thereto being attached to said Schedule 4.14), and all such
property is in the Company’s actual possession and is in such condition that
upon the return of such property in its present condition to its owner, the
Company will not be liable in any amount to such owner. There are no outstanding
requirements or recommendations by any insurance company that has issued a
policy covering either (i) such Fixed Assets or (ii) any liabilities of the
Company relating to operation of the Business, or by any board of fire
underwriters or other body exercising similar functions, requiring or
recommending any repairs or work to be done on any Fixed Assets or any changes
in the operations of the Business, any equipment or machinery used therein, or
any procedures relating to such operations, equipment or machinery. All Fixed
Assets of the Company are set forth on Schedule 4.14 hereto.

4.15      Real Property Matters.     (a) Schedule 4.15(a) sets forth a complete
list of (i) all real property  

and interests in real property owned in fee by the Company (individually, an
"Owned Property" and collectively, the "Owned Properties"), and (ii) all real
property and interests in real property leased by the Company (individually, a
"Real Property Lease" and the real properties specified in such leases, together
with the Owned Properties, being referred to herein individually as a "Company
Property" and collectively as the "Company Properties") as lessee or lessor. The
Company has good and marketable fee title to all Owned Properties, free and
clear of all Liens of any nature whatsoever except (A) Liens set forth on
Schedule 4.15(a) and (B) Permitted Exceptions. The Company Properties constitute
all interests in real property currently used or currently held for use in
connection with the Business and which are necessary for the continued operation
of the Business as the business is currently conducted. The Company has a valid
and enforceable leasehold interest under each of the Real Property Leases,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and subject, as
to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), and the Company has
not received any written notice of any default or event that with notice or
lapse of time, or both, would constitute a default by the Company under any of
the Real Property Leases. All of the Company Property, buildings, fixtures and
improvements thereon owned or leased by the Company are in good operating
condition and repair (subject to normal wear and tear).

     (i) For purposes of this Agreement, “Lien” shall mean debts, liabilities,
commitments, obligations, duties and responsibilities of any kind and
description, whether absolute or contingent, monetary or non-monetary, direct or
indirect, known or unknown or matured or unmatured, or of any other nature.

     (b) The Company has all material certificates of occupancy and Permits of
any Governmental Body necessary or useful for the current use and operation of
each Company Property, and the Company has fully complied with all material
conditions of the Permits applicable to it. No default or violation, or event
that with the lapse of time or giving of notice or both would become a default
or violation, has occurred in the due observance of any Permit.

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     (c) There does not exist any actual or, to the best knowledge of the
Company or the Seller, threatened or contemplated condemnation or eminent domain
proceedings that affect any Company Property or any part thereof, and the
Company has not received any notice, oral or written, of the intention of any
Governmental Body or other Person to take or use all or any part thereof.

     (d) Neither the Company nor the Seller has received any written notice from
any insurance company that has issued a policy with respect to any Company
Property requiring performance of any structural or other repairs or alterations
to such Company Property.

     (e) The Company does not own or hold, and is not obligated under or a party
to, any option, right of first refusal or other contractual right to purchase,
acquire, sell, assign or dispose of any real estate or any portion thereof or
interest therein.

  4.16 Leases.

     All leases of real and personal property of the Company are described in
Schedule 4.16, are in full force and effect and constitute legal, valid and
binding obligations of the respective parties thereto enforceable in accordance
with their terms, except as limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting generally the enforcement of
creditor’s rights, and have not been assigned or encumbered. The Company has
performed in all material respects the obligations required to be performed by
it under all such leases to date and it is not in default in any material
respect under any of said leases, except as set forth in Schedule 4.16, nor has
it made any leasehold improvements required to be removed at the termination of
any lease, except signs. No other party to any such lease is in material default
thereunder. Except as noted on Schedule 4.16, none of the leases listed thereon
require the consent of a third party in connection with the transfer of the
Shares.

  4.17 Patents, Software, Trademarks, Etc.

     The Company owns, or possesses adequate licenses or other rights to use,
all patents, software, trademarks, service marks, trade names, copyrights,
proprietary information and trade secrets, if any, necessary to conduct the
Business as now operated by it. The patents, software, trademarks, service
marks, copyrights, proprietary information, trade names and trade secrets, if
any, registered in the name of or owned or used by or licensed to the Company
and applications for any thereof (hereinafter the “Intangibles”) are described
or referenced in Schedule 4.17. The Seller hereby specifically acknowledges that
all right, title and interest in and to all patents, software and proprietary
information listed on Schedule 4.17 are owned by the Company and that the
ownership of such patents, software or proprietary information will be
transferred as part of the Company to Purchaser as part of the transaction
contemplated hereby. No officer, director, shareholder or employee of the
Company or any relative or spouse of any such person owns any patents or patent
applications or any inventions, software, secret formulae or processes, trade
secrets or other similar rights, nor is any of them a party to any license
agreement, used by or useful to the Company or related to the Business except as
listed in Schedule 4.17. All of said Intangibles are valid and in good standing,
are free and clear of all liens, security interests, charges, restrictions and
encumbrances of any kind whatsoever, and have not been licensed to any third
party except as described in Schedule 4.17. The Company has not

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been charged with, nor has it infringed, nor to the Seller’s knowledge is it
threatened to be charged with infringement of, any patent, proprietary rights or
trade secrets of others in the conduct of its business, and, to the date hereof,
neither the Seller nor the Company has received any notice of conflict with or
violation of the asserted rights in intangibles or trade secrets of others. The
Company is not now manufacturing any goods under a present permit, franchise or
license, except as set forth in said Schedule 4.17. The consummation of the
transactions contemplated hereby will not alter or impair any rights of the
Company in any such Intangibles or in any such permit, franchise or license,
except as described in Schedule 4.17. The Intangibles and the Company’s tooling,
manufacturing and engineering drawings, process sheets, specifications, bills of
material and other like information and data are in such form and of such
quality and will be maintained in such a manner that the Company can, following
the Closing, design, produce, manufacture, assemble and sell the products and
provide the services heretofore provided by it so that such products and
services meet applicable specifications and conform with the standards of
quality and cost of production standards heretofore met by it. The Company has
the sole and exclusive right to use its corporate and trade names in the
jurisdictions where it transacts business.

  4.18 Insurance Policies.

     There is set forth in Schedule 4.18 a list and brief description of all
insurance policies on the date hereof held by the Company or on which it pays
premiums, including, without limitation, life insurance and title insurance
policies, which description includes the premiums payable by it thereunder.
Schedule 4.18 also sets forth, in the case of any life insurance policy held by
the Company, the name of the insured under such policy, the cash surrender value
thereof and any loans thereunder. All such insurance premiums in respect of such
coverage have been, and to the Closing Date will be, paid in full, or if not
due, properly accrued on the Balance Sheet. All claims, if any, made against the
Company which are covered by such policies have been, or are being, settled or
defended by the insurance companies that have issued such policies. Up to the
Closing Date, such insurance coverage will be maintained in full force and
effect and will not be cancelled, modified or changed without the express
written consent of the Purchaser, except to the extent the maturity dates of any
such insurance policies expiring prior to the Closing Date. No such policy has
been, or to the Closing Date will be, cancelled by the issuer thereof, and, to
the knowledge of the Seller, between the date hereof and the Closing Date, there
shall be no increase in the premiums with respect to any such insurance policy
caused by any action or omission of the Seller or of the Company.

  4.19 Banking and Personnel Lists.

     The Seller will deliver to the Purchaser prior to the Closing Date the
following accurate lists and summary descriptions relating to the Company:

                 (i) The name of each bank in which the Company has an account
or safe deposit box and the names of all persons authorized to draw thereon or
have access thereto.

 

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               (ii) The names, current annual salary rates and total
compensation for the preceding fiscal year of all of the present directors and
officers of the Company, and any other employees whose current base accrual
salary or annualized hourly rate equivalent is $20,000 or more, together with a
summary of the bonuses, percentage compensation and other like benefits, if any,
paid or payable to such persons for the last full fiscal year completed,
together with a schedule of changes since that date, if any.

               (iii) A schedule of workers’ compensation payments of the Company
over the past five full fiscal years and the fiscal year to date, a schedule of
claims by employees of the Company against the workers’ compensation fund for
any reason over such period, identification of all compensation and medical
benefits paid to date on each such claim and the estimated amount of
compensation and medical benefits to be paid in the future on each such claim.

                (iv) The name of all pensioned employees of the Company whose
pensions are unfunded and are not paid or payable pursuant to any formalized
pension arrangements, their agent and annual unfunded pension rates.

  4.20 Lists of Contracts, Etc.

     There is included in Schedule 4.20 a list of the following items (whether
written or oral) relating to the Company, which list identifies and fairly
summarizes each item:

                  (i) All collective bargaining and other labor union agreements
(if any); all employment agreements with any officer, director, employee or
consultant; and all employee pension, health and welfare benefit plans, group
insurance, bonus, profit sharing, severance, vacation, hospitalization, and
retirement plans, post-retirement medical benefit plans, and any other plans,
arrangements or custom requiring payments or benefits to current or retiring
employees.

                 (ii) All joint venture contracts and joint operating agreements
of the Company or affiliates relating to the Business;

                 (iii) All contracts of the Company relating to (a) obligations
for borrowed money, (b) obligations evidenced by bonds, debentures, notes or
other similar instruments, (c) obligations to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (d) obligations under capital leases, (e) debt of others
secured by a lien on any asset of the Company, and (f) debts of others
guaranteed by the Company.

                (iv) All agreements of the Company relating to the supply of raw
materials for and the distribution of the products of the Business, including
without limitation all sales agreements, manufacturer’s representative
agreements and distribution agreements of whatever magnitude and nature, and any
commitments therefor;

 

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                 (v) All contracts that individually provide for aggregate
future payments to or from the Company of $25,000 or more, to the extent not
included in (i) through (iv) above;

                 (vi) All contracts of the Company that have a term exceeding
one year and that may not be cancelled without any liability, penalty or
premium, to the extent not included in (i) through (v) above;

                 (vii) A complete list of all outstanding powers of attorney 
granted by the Company; and 

                  (viii) All other contracts of the Company material to
the Business, assets, liabilities, financial condition, results of operations or
prospects of the Business taken as a whole to the extent not included above,
including but not limited to contracts for the licensing and ownership of
geological and geophysical data (raw data and interpretations thereon).

     Except as set forth in Schedule 4.20, (i) all contracts, agreements and
commitments of the Company set forth in Schedule 4.20 are valid, binding and in
full force and effect, and (ii) neither the Company nor any other party to any
such contract, agreement, or commitment has materially breached any provision
thereof or is in default thereunder. Except as set forth in Schedule 4.20, the
sale of the Shares by the Seller in accordance with this Agreement will not
result in the termination or provide any party to such contract the opportunity
to terminate of any contract, agreement or commitment of the Company set forth
in Schedule 4.20, and immediately after the Closing, each such contract,
agreement or commitment will continue in full force and effect without the
imposition or acceleration of any burdensome condition or other obligation on
the Company resulting from the sale of the Shares by the Seller. True and
complete copies of the contracts, leases, licenses and other documents referred
to in this Section 4.20 will be delivered to the Purchaser, certified by the
Secretary or Assistant Secretary of the Company as true, correct and complete
copies, not later than four weeks from the date hereof or ten business days
before the Closing Date, whichever is sooner.

     There are no pending disputes with customers or vendors of the Company
regarding quality or return of goods involving amounts in dispute with any one
customer or vendor, whether for related or unrelated claims, in excess of $5,000
except as described on Schedule 4.20 hereto, all of which will be resolved to
the reasonable satisfaction of Purchaser prior to the Closing Date. To the
knowledge of Seller, there has not been any event, happening, threat or fact
that would lead them to believe that any of said customers or vendors will
terminate or materially alter their business relationship with the Company after
completion of the transactions contemplated by this Agreement.

  4.21 Compliance With the Law.

     The Company is not in violation of any applicable federal, state, local or
foreign law, regulation or order or any other, decree or requirement of any
governmental, regulatory or administrative agency or authority or court or other
tribunal (including, but not limited to, any law, regulation order or
requirement relating to securities, properties, business, products,

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manufacturing processes, advertising, sales or employment practices, terms and
conditions of employment, occupational safety, health and welfare, conditions of
occupied premises, product safety and liability, civil rights, or environmental
protection, including, but not limited to, those related to waste management,
air pollution control, waste water treatment or noise abatement). Except as set
forth in Schedule 4.21, the Company has not been and is not now charged with, or
to the knowledge of the Seller or the Company under investigation with respect
to, any violation of any applicable law, regulation, order or requirement
relating to any of the foregoing, nor, to the knowledge of the Seller after due
inquiry, are there any circumstances that would or might give rise to any such
violation. The Company has filed all reports required to be filed with any
governmental, regulatory or administrative agency or authority.

  4.22 Litigation; Pending Labor Disputes.

     Except as specifically identified on the Balance Sheet or footnotes thereto
or set forth in Schedule 4.22:

             (i) There are no Legal Proceedings (as defined below) or other
proceedings or governmental investigations pending or, to the knowledge of the
Seller, threatened, against the Seller or the Company, relating to the Business
or the Company or its properties (including leased property), or the
transactions contemplated by this Agreement, nor is there any basis known to the
Seller for any such action.

             (ii) There are no judgments, decrees or orders of any court, or any
governmental department, commission, board, agency or instrumentality binding
upon the Seller or the Company relating to the Business or the Company the
effect of which is to prohibit any business practice or the acquisition of any
property or the conduct of any business by the Company or which limit or control
or otherwise adversely affect its method or manner of doing business.

              (iii) No work stoppage has occurred and is continuing or, to the
knowledge of the Seller, is threatened affecting the Business, and no
representation question involving recognition of a collective bargaining agent
exists in respect of any employees of the Company.

               (iv) There are no pending labor negotiations or union
organization efforts relating to employees of the Company.

                (v) There are no charges of discrimination (relating to sex,
age, race, national origin, handicap or veteran status) or unfair labor
practices pending or, to the knowledge of the Seller, threatened before any
governmental or regulatory agency or authority or any court relating to
employees of the Company.

                (vi) For purposes of this Agreement, “Legal Proceedings” shall
mean any litigation, legal action, arbitration, administrative proceeding,
proceeding, demand, claim or investigation against, affecting or brought by or
against the Company or any Subsidiary relating to the Business, operations,
assets or liabilities of the Company.

 

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  4.23 Absence of Certain Changes or Events.

     The Company has not, since the Balance Sheet Date, except as described on
Schedule 4.23:

(i) Incurred any material obligation or liability (absolute, accrued, contingent
or otherwise) or in connection with the performance of this Agreement, and any
such obligation or liability incurred in the ordinary course is not materially
adverse, except for claims, if any, that are adequately covered by insurance;

(ii) Discharged or satisfied any lien or encumbrance, or paid or satisfied any
obligations or liability (absolute, accrued, contingent or otherwise) other than
(a) liabilities shown or reflected on the Balance Sheet, and (b) liabilities
incurred since the Balance Sheet Date in the ordinary course of business that
were not materially adverse;

(iii) Increased or established any reserve or accrual for taxes or other
liability on its books or otherwise provided therefor, except (a) as disclosed
on the Balance Sheet, or (b) as may have been required under generally accepted
accounting principles due to income earned or expense accrued since the Balance
Sheet Date and as disclosed to the Purchaser in writing;

(iv) Mortgaged, pledged or subjected to any lien, charge or other encumbrance
any of its assets, tangible or intangible;

(v) Sold or transferred any of its assets or cancelled any debts or claims or
waived any rights, except in the ordinary course of business and which has not
been materially adverse;

(vi) Disposed of or permitted to lapse any patents or trademarks or any patent
or trademark applications material to the operation of its business;

(vii) Incurred any significant labor trouble or granted any general or uniform
increase in salary or wages payable or to become payable by it to any director,
officer, employee or agent, or by means of any bonus or pension plan, contract
or other commitment increased the compensation of any director, officer,
employee or agent;

(viii) Authorized any capital expenditure for real estate or leasehold
improvements, machinery, equipment or molds in excess of $5,000.00 in the
aggregate;

(ix) Except for this Agreement, entered into any material transaction

 

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(x) Issued any stocks, bonds, or other corporate securities, or made any
declaration or payment of any dividend or any distribution in respect of its
capital stock; or

(xi) Experienced damage, destruction or loss (whether or not covered by
insurance) individually or in the aggregate materially and adversely affecting
any of its properties, assets or business, or experienced any other material
adverse change or changes individually or in the aggregate affecting its
financial condition, assets, liabilities or business.

4.24    Employee Benefit Plans.

         (a) Schedule 4.24 lists a description of the only Employee Programs as
defined below) that have been maintained (as such term is further defined below)
by the Company at any time during the five (5) years prior to the date hereof.

         (b) There has not been any failure of any party to comply with any Laws
applicable with respect to any Employee Program that has been maintained by the
Company. With respect to any Employee Programs now or heretofore maintained by
the Company, there has occurred no breach of any duty under the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”) or other applicable
law which could result, directly or indirectly in any taxes, penalties or other
liability to the Purchaser, the Company or any affiliate (as defined below). No
litigation, arbitration, or governmental administrative proceeding (or
investigation) or other proceeding (other than those relating to routine claims
for benefits) is pending or, to the knowledge of the Company and Seller,
threatened with respect to any such Employee Program.

           (c) Except as set forth in Schedule 4.24 attached hereto, neither the
Company nor any affiliate has ever (i) provided health care or any other
non-pension benefits to any employees after their employment was terminated
(other than as required by Part 6 of Subtitle B of Title I of ERISA) or has ever
promised to provide such post-termination benefits or (ii) maintained an
Employee Program provided to such employees subject to Title IV of ERISA,
Section 401(a) or Section 412 of Code, including, without limitation, any
Multiemployer Plan.

  (d) For purposes of this Section 4.24:

(i) “Employee Program” means (A) all employee benefit plans within the meaning
of ERISA Section 3(3), including, but not limited to, multiple employer welfare
arrangements (within the meaning of ERISA Section 3(40)), plans to which more
than one unaffiliated employer contributes and employee benefit plans (such as
foreign or excess benefit plans) which are not subject to ERISA; and (B) all
stock option plans, bonus or incentive award plans, severance pay policies or
agreements, deferred compensation agreements, supplemental income arrangements,
vacation plans, and all other employee benefit plans, agreements, and
arrangements not described in (A) above. In the case of an Employee Program
funded through an organization described in Code Section 501(c)(9), each
reference to such Employee Program shall include a reference to such
organization;

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(ii) An entity “maintains” an Employee Program if such entity sponsors,
contributes to, or provides (or has promised to provide) benefits under such
Employee Program, or has any obligation (by agreement or under applicable law)
to contribute to or provide benefits under such Employee Program, or if such
Employee Program provides benefits to or otherwise covers employees of such
entity (or their spouses, dependents, or beneficiaries);

(iii) An entity is an “affiliate” of the Company for purposes of this Section
3.24 if it would have ever been considered a single employer with the Company
under ERISA Section 4001(b) or part of the same “controlled group” as the
Company for purposes of ERISA Section 302(d)(8)(C); and

(iv) “Multiemployer Plan” means a (pension or non-pension) employee benefit plan
to which more than one employer contributes and which is maintained pursuant to
one or more collective bargaining agreements.

4.25 Product Warranties and Product Liabilities.

     The Company has no products or product warranties and return policies in
effect on the date hereof. There are no product liability claims that are
currently either pending or, to the best of the Seller’s, and the Company’s
knowledge threatened against the Company or any Subsidiary. The Company has not
paid in the aggregate, or allowed as credits against purchases, or received
claims for more than one percent (1%) per year of gross sales, as determined in
accordance with GAAP consistently applied, during the past three years pursuant
to obligations under any warranty or any product liability claim with respect to
goods manufactured, assembled or furnished by the Company. The future cost of
performing all such obligations and paying all such product liability claims
with respect to goods manufactured, assembled or furnished prior to the Closing
Date will not exceed the average annual cost thereof for said past three year
period.

  4.26 Assets.

     The assets of the Company are located at the locations listed on Schedule
4.26 attached hereto. Except as described in Schedule 4.26, the assets of the
Company are, and together with the additional assets to be acquired or otherwise
received by the Company prior to the Closing, will at the Closing Date be,
sufficient in all material respects to carry on the operations of the Business
as now conducted by the Company. The Company is the only business organization
through which the Business is conducted. All assets used by the Seller and the
Company to conduct the Business are, and will on the Closing Date be, owned by
the Company.

4.27 Absence of Certain Commercial Practices.

     Neither the Company, nor any of its Subsidiaries, nor to the knowledge of
the Company, any director, officer, agent, employee or other person acting on
behalf of the Company or any of its Subsidiaries, nor the Seller has (i) made
any payment (directly or by secret commissions, discounts, compensation or other
payments) or (ii) given any gifts to another business concern, to an agent or
employee of another business concern or of any governmental entity (domestic or
foreign) or to a political party or candidate for political office (domestic or

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foreign), to obtain or retain business for the Company or any of its
Subsidiaries or to receive favorable or preferential treatment, except for gifts
and entertainment given to representatives of customers or potential customers
of sufficiently limited value and in a form (other than cash) that would not be
construed as a bribe or payoff, or (iii) otherwise been in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended.

4.28 Licenses, Permits, Consents and Approvals.

     The Company has, and at the Closing Date will have, all licenses, permits
or other authorizations of governmental, regulatory or administrative agencies
or authorities (collectively, “Licenses”), including but not limited to the
Prospecting Licenses issued by the Republic of Botswana (the “Prospecting
Licenses”), required to conduct the Business. All Licenses of the Company are
listed on Schedule 4.28 hereto. With respect to the Prospecting Licenses: (i)
each license is in good standing and is not subject to any pending default or
uncured deficiency; (ii) except as disclosed in the audited Financial
Statements, all required annual payments to maintain each license have been
paid; (iii) all annual minimum expenditure requirements and annual minimum
prospecting program obligations with respect to each license have been satisfied
and (iv) each license entitles the Purchaser to a net revenue interest of no
less than eighty seven percent in all coalbed methane produced therefrom. At the
Closing, the Company will have all such Licenses which are material to the
conduct of the Business and will have renewed all Licenses which would have
expired in the interim. Except as listed in Schedule 4.28, no registration,
filing, application, notice, transfer, consent, approval, order, qualification,
waiver or other action of any kind (collectively, a “Filing”) will be required
as a result of the sale of the Shares by the Seller in accordance with this
Agreement (a) to avoid the loss of any License or the violation, breach or
termination of, or any default under, or the creation of any lien on any asset
of the Company pursuant to the terms of, any law, regulation, order or other
requirement or any contract binding upon the Company or to which any such asset
may be subject, or (b) to enable Purchaser (directly or through any designee) to
continue the operation of the Company and the Business substantially as
conducted prior to the Closing Date. All such Filings will be duly filed, given,
obtained or taken on or prior to the Closing Date and will be in full force and
effect on the Closing Date.

  4.29 Environmental Matters.

Except as set forth on Schedule 4.29 hereto:

     (a) The operations of the Company are in compliance with all applicable
Laws promulgated by any governmental entity which prohibit, regulate or control
any hazardous material or any hazardous material activity (“Environmental Laws”)
and all permits issued pursuant to Environmental Laws or otherwise except for
where noncompliance or the absence of such permits would not, individually or in
the aggregate, have a Material Adverse Effect;

     (i) For purposes of this Agreement, “Material Adverse Effect” shall mean,
with respect to any party, any material adverse effect on, or any change, event,
occurrence or state of facts materially adverse to, (i) the Business,
properties, assets, liabilities (contingent or otherwise), results of operations
or condition of the Company and its Subsidiaries taken as a

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whole, or (ii) such party’s ability to, in a timely manner, perform its
obligations under this Agreement;

     (b) The Company has obtained all permits required under all applicable
Environmental Laws necessary to operate its business;

     (c) The Company is not the subject of any outstanding written order or
contract with any Governmental Body or person respecting Environmental Laws or
any violation or potential violations thereof; and,

     (d) The Company has not received any written communication alleging either
or both that the Company may be in violation of any Environmental Law, or any
permit issued pursuant to Environmental Law, or may have any liability under any
Environmental Law.

  4.30 Broker.

     Except as specified in Schedule 4.30, neither the Company nor the Seller
has retained any broker in connection with any transaction contemplated by this
Agreement. Purchaser and the Company shall not be obligated to pay any fee or
commission associated with the retention or engagement by the Company or the
Seller of any broker in connection with any transaction contemplated by this
Agreement.

  4.31 Related Party Transactions.

     Except as described in Schedule 4.31, all transactions during the past five
years between the Company and any current or former shareholder or any entity in
which the Company or any current or former shareholder had or has a direct or
indirect interest have been fair to the Company as determined by the Board of
Directors. No portion of the sales or other on-going business relationships of
the Company is dependent upon the friendship or the personal relationships
(other than those customary within business generally) of the Seller, except as
described in Schedule 4.31. During the past five years, the Company has not
forgiven or cancelled, without receiving full consideration, any indebtedness
owing to it by the Seller.

  4.32 Patriot Act.

     The Seller certifies that neither the Company nor any of its Subsidiaries
has been designated, and is not owned or controlled, by a “suspected terrorist”
as defined in Executive Order 13224. The Seller hereby acknowledges that the
Purchaser seeks to comply with all applicable laws concerning money laundering
and related activities. In furtherance of those efforts, the Seller hereby
represents, warrants and agrees that: (i) none of the cash or property that the
Seller has contributed or paid or will contribute and pay to the Company has
been or shall be derived from, or related to, any activity that is deemed
criminal under United States law; and (ii) no contribution or payment by the
Company or any of its Subsidiaries to the Purchaser, to the extent that they are
within the Company’s and/or its Subsidiaries’ control shall cause the Purchaser
to be in violation of the United States Bank Secrecy Act, the United States
International Money Laundering Control Act of 1986 or the United States
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001. The Seller shall promptly notify the Purchaser if any of these
representations ceases to be true and accurate regarding the

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Seller, the Company or any of its Subsidiaries. The Seller agree to provide the
Purchaser any additional information regarding the Company or any of its
Subsidiaries that the Purchaser reasonably requests to ensure compliance with
all applicable laws concerning money laundering and similar activities.

  4.33 Disclosure.

     All statements contained in any schedule, certificate, opinion, instrument,
or other document delivered by or on behalf of the Seller pursuant hereto or in
connection with the transactions contemplated hereby shall be deemed
representations and warranties by the Seller herein. No statement,
representation or warranty by the Seller in this Agreement or in any schedule,
certificate, opinion, instrument, or other document furnished or to be furnished
to the Purchaser pursuant hereto or in connection with the transactions
contemplated hereby contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be stated
therein or necessary to make the statements contained therein not misleading or
necessary in order to provide a prospective purchaser of the business of the
Company with full and fair disclosure concerning the Company, the Business, and
the Company’s affairs.

  4.34 Investment Intent.

     The Warrants are being acquired hereunder by the Seller for investment
purposes only, for its own account, not as a nominee or agent and not with a
view to the distribution thereof. The Seller has no present intention to sell or
otherwise dispose of the Warrants or the underlying shares of common stock and
will not do so except in compliance with the provisions of the Securities Act of
1933, as amended (the “1933 Act”), and applicable law. The Seller understands
that the Warrants and underlying common stock acquired hereunder must be held by
it indefinitely unless a subsequent disposition or transfer of any of said
shares is registered under the 1933 Act, or is exempt from registration
therefrom. The Seller further understands that the exemption from registration
afforded by Rule 144 (the provisions of which are known to the Seller)
promulgated under the Securities Act of 1933, as amended, depends on the
satisfaction of various conditions, and that, if and when applicable, Rule 144
may afford the basis for sales only in limited amounts.

  4.35 Investment Experience; Suitability.

     The Seller is a sophisticated investor familiar with the type of risks
inherent in the acquisition of securities such as the shares of the Purchaser
and the Seller’s financial position is such that the Seller can afford to retain
the Warrants and underlying common stock for an indefinite period of time
without realizing any direct or indirect cash return on its investment.

  4.36 Accredited Investor Status.

     The Seller is an “accredited investor” as that term is defined in Rule
501(a) of Regulation D and the Seller shall submit to the Purchaser such
additional information as may be reasonably requested by the Purchaser to
establish the Seller’s status as such; or

  4.37 Reliance on Exemptions.

267670

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     The Seller understands that Warrants and the underlying shares of common
stock are being offered and sold to it in reliance on specific exemptions from
the registration requirements of United States federal and state securities laws
and that the Purchaser is relying in part upon the truth and accuracy of, and
the Seller’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Seller set forth herein in order to
determine the availability of such exemptions and the eligibility of the Seller
to acquire the Warrants.

  4.38 Legends.

     The Seller understands that the certificates or other instruments
representing the Warrants, shall bear any legend as required by the “blue sky”
laws of any state and a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of such warrant and
underlying shares of common stock):

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A
FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PURCHASER

5.1 Organization and Good Standing.

     The Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Colorado.

5.2 Authority.

(a) The execution and delivery of this Agreement and the consummation of the
transactions contemplated herein have been, or will prior to Closing be, duly
and validly approved and acknowledged by all necessary corporate action on the
part of the Purchaser.

(b) The execution of this Agreement and the delivery hereof to the Seller and
the purchase contemplated herein have been, or will be prior to Closing, duly
authorized by the Purchaser’s Board of Directors having full power and authority
to authorize such actions.

  5.3 Conflicts; Consents of Third Parties.

 

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     (a) The execution and delivery of this Agreement, the acquisition of the
Shares by Purchaser and the consummation of the transactions herein
contemplated, and the compliance with the provisions and terms of this
Agreement, are not prohibited by the Articles of Incorporation or Bylaws of the
Purchaser and will not violate, conflict with or result in a breach of any of
the terms or provisions of, or constitute a default under, any court order,
indenture, mortgage, loan agreement, or other agreement or instrument to which
the Purchaser is a party or by which it is bound.

     (b) No consent, waiver, approval, order, permit or authorization of, or
declaration or filing with, or notification to, any person or Governmental Body
is required on the part of the Purchaser in connection with the execution and
delivery of this Agreement or the Purchaser Documents or the compliance by
Purchaser with any of the provisions hereof or thereof.

  5.4 Litigation.

     There are no Legal Proceedings pending or, to the best knowledge of the
Purchaser, threatened that are reasonably likely to prohibit or restrain the
ability of the Purchaser to enter into this Agreement or consummate the
transactions contemplated hereby.

  5.5 Investment Intention.

     The Purchaser is acquiring the Shares for its own account, for investment
purposes only and not with a view to the distribution (as such term is used in
Section 2(11) of the Securities Act of 1933, as amended (the "Securities Act")
thereof. Purchaser understands that the Shares have not been registered under
the Securities Act and cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available.

  5.6 Broker.

     The Purchaser has not retained any broker in connection with any
transaction contemplated by this Agreement. The Seller shall not be obligated to
pay any fee or commission associated with the retention or engagement by the
Purchaser of any broker in connection with any transaction contemplated by this
Agreement.

  5.7 Patriot Act.

      The Purchaser certifies that neither the Purchaser nor any of its
subsidiaries has been designated, and is not owned or controlled, by a
“suspected terrorist” as defined in Executive Order 13224. The Purchaser hereby
acknowledges that the Seller seek to comply with all applicable laws concerning
money laundering and related activities. In furtherance of those efforts, the
Purchaser hereby represents, warrants and agrees that: (i) none of the cash or
property that the Purchasers have contributed or paid or will contribute and pay
to the Seller has been or shall be derived from, or related to, any activity
that is deemed criminal under United States law; and (ii) no contribution or
payment by the Purchaser or any of its subsidiaries to the Seller, to the extent
that they are within the Purchaser’s control shall cause the Seller or the
Company to be in violation of the United States Bank Secrecy Act, the United
States International Money Laundering Control Act of 1986 or the United States
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001. The Purchaser shall

 

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promptly notify the Seller if any of these representations ceases to be true and
accurate regarding the Purchaser or any of its subsidiaries. The Purchaser
agrees to provide the Seller any additional information regarding the Purchaser
or any of its subsidiaries that the Seller reasonably requests to ensure
compliance with all applicable laws concerning money laundering and similar
activities.

ARTICLE VI
COVENANTS

  6.1 Access to Information.

     The Seller agrees that, prior to the Closing Date, the Purchaser shall be
entitled, through its officers, employees and representatives (including,
without limitation, its legal advisors and accountants), to make such
investigation of the properties, businesses and operations of the Company and
its Subsidiaries and such examination of the books, records and financial
condition of the Company and its Subsidiaries as it reasonably requests and to
make extracts and copies of such books and records. Any such investigation and
examination shall be conducted during regular business hours and under
reasonable circumstances, and the Seller shall cooperate, and shall cause the
Company and its Subsidiaries to cooperate, fully therein. No investigation by
the Purchaser prior to or after the date of this Agreement shall diminish or
obviate any of the representations, warranties, covenants or agreements of the
Seller contained in this Agreement. In order that the Purchaser may have full
opportunity to make such physical, business, accounting and legal review,
examination or investigation as it may reasonably request of the affairs of the
Company and its Subsidiaries, the Seller shall cause the officers, employees,
consultants, agents, accountants, attorneys and other representatives of the
Company and its Subsidiaries to cooperate fully with such representatives in
connection with such review and examination.

6.2 Conduct of the Business Pending the Closing.

     (a) Except as otherwise expressly contemplated by this Agreement or with
the prior written consent of the Purchaser, the Seller shall, and shall cause
the Company to:

  (i)  Conduct the Business only in the ordinary course consistent with past
practice; 

  (ii)  Use its best efforts to (A) preserve its present business operations,
organization (including, without limitation, management and the sales force) and
goodwill of the Company and (B) preserve its present relationship with Persons
having business dealings with the Company;

     (iii) Maintain (A) all of the assets and properties of the Company in their
current condition, ordinary wear and tear excepted and (B) insurance upon all of
the properties and assets of the Company in such amounts and of such kinds
com-parable to that in effect on the date of this Agreement;

     (iv) (A) maintain the books, accounts and records of the Company in the
ordinary course of business consistent with past practices, (B) continue to
collect accounts

 

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receivable and pay accounts payable utilizing normal procedures and without
discounting or accelerating payment of such accounts, and (C) comply with all
contractual and other obligations applicable to the operation of the Company;
and

(v) Comply in all material respects with applicable Laws.

     (b) Except as otherwise expressly contemplated by this Agreement or with
the prior written consent of the Purchaser, the Seller shall not, and shall
cause the Company not to:

     (i) Declare, set aside, make or pay any dividend or other distribution in
respect of the capital stock of the Company or repurchase, redeem or otherwise
acquire any outstanding shares of the capital stock or other securities of, or
other ownership interests in, the Company;

     (ii) Transfer, issue, sell or dispose of any shares of capital stock or
other securities of the Company or grant options, warrants, calls or other
rights to purchase or otherwise acquire shares of the capital stock or other
securities of the Company;

     (iii) Effect any recapitalization, reclassification, stock split or like
change in the capitalization of the Company;

     (iv) Amend the Memorandum and Articles of Association of the Company; 

      (v)  (A) materially increase the annual level of compensation of any 
employee of the Company, (B) increase the annual level of compensation payable
or to become payable by the Company to any of its executive officers, (C) grant
any unusual or extraordinary bonus, benefit or other direct or indirect
compensation to any employee, director or consultant, (D) increase the coverage
or benefits available under any (or create any new) severance pay, termination
pay, vacation pay, company awards, salary continuation for disability, sick
leave, deferred compensation, bonus or other incentive compensation, insurance,
pension or other employee benefit plan or arrangement made to, for, or with any
of the directors, officers, employees, agents or representatives of the Company
or otherwise modify or amend or terminate any such plan or arrangement or (E)
enter into any employment, deferred compensation, severance, consulting,
non-competition or similar agreement (or amend any such agreement) to which the
Company is a party or involving a director, officer or employee of the Company
in his or her capacity as a director, officer or employee of the Company;

     (vi) Except for trade payables and for indebtedness for borrowed money
incurred in the ordinary course of business and consistent with past practice,
borrow monies for any reason or draw down on any line of credit or debt
obligation, or become the guarantor, surety, endorser or otherwise liable for
any debt, obligation or liability (contingent or otherwise) of any other Person,
or change the terms of payables or receivables;

     (vii) Subject to any Lien (except for leases that do not materially impair
the use of the property subject thereto in their respective businesses as
presently conducted), any of the properties or assets (whether tangible or
intangible) of the Company;

 

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     (viii) Acquire any material properties or assets or sell, assign, transfer,
convey, lease or otherwise dispose of any of the material properties or assets
(except for fair consideration in the ordinary course of business consistent
with past practice) of the Company except, with respect to the items listed on
Schedule 6.2(b)(viii) hereto, as previously consented to by the Purchaser;

     (ix) Cancel or compromise any debt or claim or waive or release any
material right of the Company except in the ordinary course of business
consistent with past practice;

     (x)  Enter into any commitment for capital expenditures out of the ordinary
course; 

     (xi)  Permit the Company to enter into any transaction or to make or  enter
into any contract which by reason of its size or otherwise is not in the
ordinary course of business consistent with past practice;

     (xii) Permit the Company to enter into or agree to enter into any merger or
consolidation with, any corporation or other entity, and not engage in any new
business or invest in, make a loan, advance or capital contribution to, or
otherwise acquire the securities of any other Person;

     (xiii) Except for transfers of cash pursuant to normal cash management
practices, permit the Company to make any investments in or loans to, or pay any
fees or expenses to, or enter into or modify any contract with, the Seller or
any Affiliate of the Seller; or

     (xiv) Agree to do anything prohibited by this Section 6.2 or anything which
would make any of the representations and warranties of the Seller in this
Agreement untrue or incorrect in any material respect as of any time through and
including the Closing.

  6.3 Consents.

     The Seller shall use its best efforts, and the Purchaser shall cooperate
with the Seller, to obtain at the earliest practicable date all consents and
approvals required to consummate the transactions contemplated by this
Agreement, including, without limitation, the consents and approvals referred to
in Section 4.7 hereof; provided, however, that neither the Seller nor the
Purchaser shall be obligated to pay any consideration therefor to any third
party from whom consent or approval is requested.

  6.4 Other Actions.

     Each of the Seller and the Purchaser shall use its best efforts to (i) take
all actions necessary or appropriate to consummate the transactions contemplated
by this Agreement and (ii) cause the fulfillment at the earliest practicable
date of all of the conditions to their respective obligations to consummate the
transactions contemplated by this Agreement.

  6.5 No Solicitation.

 

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     The Seller will not, and will not cause or permit the Company or any of the
Company's directors, officers, employees, representatives or agents
(collectively, the "Representatives") to, directly or indirectly, (i) discuss,
negotiate, undertake, authorize, recommend, propose or enter into, either as the
proposed surviving, merged, acquiring or acquired corporation, any transaction
involving a merger, consolidation, business combination, purchase or disposition
of any amount of the assets or capital stock or other equity interest in the
Company other than the transactions contemplated by this Agreement (an
"Acquisition Transaction"), (ii) facilitate, encourage, solicit or initiate
discussions, negotiations or submissions of proposals or offers in respect of an
Acquisition Transaction, (iii) furnish or cause to be furnished, to any Person,
any information concerning the business, operations, properties or assets of the
Company in connection with an Acquisition Transaction, or (iv) otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other Person to do or seek any of the foregoing.
The Seller will inform the Purchaser in writing immediately following the
receipt by the Seller, the Company or any Representative of any proposal or
inquiry in respect of any Acquisition Transaction.

  6.6 Preservation of Records.

     The Seller and the Purchaser agree that each of them shall preserve and
keep the records held by it relating to the business of the Company for a period
of three years from the Closing Date and shall make such records and personnel
available to the other as may be reasonably required by such party in connection
with, among other things, any insurance claims by, legal proceedings against or
governmental investigations of the Seller or the Purchaser or any of their
Affiliates or in order to enable the Seller or the Purchaser to comply with
their respective obligations under this Agreement and each other agreement,
document or instrument contemplated hereby or thereby.

  6.7 Publicity.

     Neither the Seller nor the Purchaser shall issue any press release or
public announcement concerning this Agreement or the transactions contemplated
hereby without obtaining the prior written approval of the other party hereto,
which approval will not be unreasonably withheld or delayed, unless, in the sole
judgment of the Purchaser or the Seller, disclosure is otherwise required by
applicable Law or by the applicable rules of any stock exchange on which the
Purchaser lists securities, provided that, to the extent required by applicable
law, the party intending to make such release shall use its best efforts
consistent with such applicable law to consult with the other party with respect
to the text thereof.

  6.8 Financial Statements.

     The Seller shall cooperate with the Purchaser to provide all information
required for the completion of audited financial statements of the Company to be
prepared and delivered as of the Closing Date.

6.9     

Tax Matters.

  

(a) Tax Periods Ending on or Before the Closing Date. The Seller shall prepare
or cause to be prepared and file or cause to be filed all Tax Returns for the
Company for all

 

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periods ending on or prior to the Closing Date which are to filed after the
Closing Date as soon as practicable and prior to the date due (including any
proper extensions thereof). The Seller shall permit the Company and the
Purchaser to review and provide comments, if any, on each such Return described
in the preceding sentence prior to filing. Unless the Purchaser or the Company
provides comments to the Seller, the Company shall deliver to the Seller each
such Return signed by the appropriate officer(s) of the Company for filing
within ten (10) days following the Seller’s delivery to the Company and the
Purchaser of any such Return. The Seller shall deliver to the Company promptly
after filing each such Return a copy of the filed Return and evidence of its
filing. The Seller shall pay the costs and expenses incurred in the preparation
and filing of the Tax Returns on or before the date such costs and expenses are
due.

If the Company provides comments to the Seller and at the end of such ten (10)
day period the Company and the Seller has failed to reach written agreement with
respect to all of such disputed items, the parties shall submit the unresolved
items to arbitration for final determination. Promptly, but no later than thirty
(30) days after its acceptance of its appointment as arbitrator, the arbitrator
shall render an opinion as to the disputed items. The determination of the
arbitrator shall be conclusive and binding upon the parties. The Company and the
Seller shall each pay one half of the fees, costs and expenses of the
arbitrator. The prevailing party may be entitled to an award of pre- and
post-award interest as well as reasonable attorneys’ fees incurred in connection
with the arbitration and any judicial proceedings related thereto as determined
by the arbitrator.

(b) Tax Periods Beginning Before and Ending After the Closing Date. The Company
or the Purchaser shall prepare or cause to be prepared and file or cause to be
filed any Returns of the Company for Tax periods that begin before the Closing
Date and end after the Closing Date. To the extent such Taxes are not fully
reserved for in the Company’s financial statements, the Seller shall pay to the
Company an amount equal to the unreserved portion of such Taxes that relates to
the portion of the Tax period ending on the Closing Date. Such payment, if any,
shall be paid by the Seller within fifteen (15) days after receipt of written
notice from the Company or the Purchaser that such Taxes were paid by the
Company or the Purchaser for a period beginning prior to the Closing Date. For
purposes of this Section, in the case of any Taxes that are imposed on a
periodic basis and are payable for a Taxable period that includes (but does not
end on) the Closing Date, the portion of such Tax that relates to the portion of
such Tax period ending on the Closing Date shall (i) in the case of any Taxes
other than Taxes based upon or related to income or receipts, be deemed to be
the amount of such Tax for the entire Tax period multiplied by a fraction the
numerator of which is the number of days in the Tax period ending on the Closing
Date and the denominator of which is the number of days in the entire Tax period
(the “Pro Rata Amount”), and (ii) in the case of any Tax based upon or related
to income or receipts, be deemed equal to the amount that would be payable if
the relevant Tax period ended on the Closing Date. The Seller shall pay to the
Company with the payment of any taxes due hereunder, the Seller’s Pro Rata
Amount of the costs and expenses incurred by the Purchaser or the Company in the
preparation and filing of the Tax Returns. Any net operating losses or credits
relating to a Tax period that begins before and ends after the Closing Date
shall be taken into account as though the relevant Tax period ended on the
Closing Date. All determinations necessary to give effect to the foregoing
allocations shall be made in a reasonable manner as agreed to by the parties.

 

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(c) Refunds and Tax Benefits. Any Tax refunds that are received after the
Closing Date by the Seller (other than tax refunds received in connection with
the Seller’s individual tax Returns), the Purchaser or the Company, and any
amounts credited against Tax to which the Seller, the Purchaser or the Company
become entitled, shall be for the account of the Company, and the Seller shall
pay over to the Company any such refund or the amount of any such credit within
fifteen (15) days after receipt or entitlement thereto. In addition, to the
extent that a claim for refund or a proceeding results in a payment or credit
against Tax by a taxing authority to the Seller, the Seller shall pay such
amount to the Company within fifteen (15) days after receipt or entitlement
thereto.

(d)      Cooperation on Tax Matters.

         (i) The Purchaser, the Company and the Seller shall cooperate fully, as
and to the extent reasonably requested by the other party, in connection with
the filing of any Returns pursuant to this Section and any audit, litigation or
other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. The Company and the Seller agrees (A) to retain all books and records
with respect to Tax matters pertinent to the Company relating to any taxable
period beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by the Purchaser or the Seller, any
extensions thereof) of the respective tax periods, and to abide by all record
retention agreements entered into with any taxing authority, and (B) to give the
other party reasonable written notice prior to transferring, destroying or
discarding any such books and records and, if the other party so requests, the
Company or the Seller, as the case may be, shall allow the other party to take
possession of such books and records.

(ii) The Purchaser and the Seller further agree, upon request, to use their
commercially reasonable best efforts to obtain any certificate or other document
from any Governmental Body or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).

(iii) The Purchaser and the Seller further agree, upon request, to provide the
other party with all information that either party may be required to report
pursuant to §6043 of the Code and all Treasury Department Regulations
promulgated thereunder.

ARTICLE VII
CONDITIONS TO CLOSING

7.1 Conditions Precedent to Obligations of Purchaser.

     The obligation of the Purchaser to consummate the transactions contemplated
by this Agreement is subject to the fulfillment, on or prior to the Closing
Date, of each of the following conditions (any or all of which may be waived by
the Purchaser in whole or in part to the extent permitted by applicable law):

 

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     (a) all representations and warranties of the Seller contained herein shall
be true and correct as of the date hereof;

     (b) all representations and warranties of the Seller contained herein
qualified as to materiality shall be true and correct, and the representations
and warranties of the Seller contained herein not qualified as to materiality
shall be true and correct in all material respects, at and as of the Closing
Date with the same effect as though those representations and warranties had
been made again at and as of that time;

     (c) the Seller shall have performed and complied in all material respects
with all obligations and covenants required by this Agreement to be performed or
complied with by it on or prior to the Closing Date;

     (d) the Purchaser shall have been furnished with certificates (dated the
Closing Date and in form and substance reasonably satisfactory to the Purchaser)
executed by the Seller certifying as to the fulfillment of the conditions
specified in Sections 7.1(a), 7.1(b) and 7.1(c) hereof;

     (e) Certificates representing the Shares shall have been, or shall at the
Closing be, validly delivered and transferred to the Purchaser, free and clear
of any and all Liens;

     (f) there shall not have been or occurred any material adverse change to
the Company or its Business;

     (g) the Seller shall have obtained all consents and waivers referred to in
Section 4.7 hereof, in a form reasonably satisfactory to the Purchaser, with
respect to the transactions contemplated by this Agreement;

     (h) no Legal Proceedings shall have been instituted or threatened or claim
or demand made against the Seller, the Company, or the Purchaser seeking to
restrain or prohibit or to obtain substantial damages with respect to the
consummation of the transactions contemplated hereby, and there shall not be in
effect any order by a Governmental Body of competent jurisdiction restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby; and

     (i) the Purchaser shall have received the audited financial statements of
the Company, in form and scope required for SEC reporting purposes.

7.2 Conditions Precedent to Obligations of the Seller.

     The obligations of the Seller to consummate the transactions contemplated
by this Agreement are subject to the fulfillment, prior to or on the Closing
Date, of each of the following conditions (any or all of which may be waived by
the Seller in whole or in part to the extent permitted by applicable law):

     (a) all representations and warranties of the Purchaser contained herein
shall be true and correct as of the date hereof;

 

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     (b) all representations and warranties of the Purchaser contained herein
qualified as to materiality shall be true and correct, and all representations
and warranties of the Purchaser contained herein not qualified as to materiality
shall be true and correct in all material respects, at and as of the Closing
Date with the same effect as though those representations and warranties had
been made again at and as of that date;

     (c) the Purchaser shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by Purchaser on or prior to the Closing Date;

     (d) the Seller shall have been furnished with certificates (dated the
Closing Date and in form and substance reasonably satisfactory to the Seller)
executed by the Chief Executive Officer and Chief Financial Officer of the
Purchaser certifying as to the fulfillment of the conditions specified in
Sections 7.2(a), 7.2(b) and 7.2(c); and

     (e) no Legal Proceedings shall have been instituted or threatened or claim
or demand made against the Seller, the Company, or the Purchaser seeking to
restrain or prohibit or to obtain substantial damages with respect to the
consummation of the transactions contemplated hereby, and there shall not be in
effect any Order by a Governmental Body of competent jurisdiction restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby.

  7.3 Conditions Subsequent to Closing.

     (a) Purchaser shall be required to close upon a private placement offering
(“First Private Placement”) of at least $5,000,000 within thirty (30) business
days of the Closing Date, from which the First Payment shall be made to Seller.

     (b) Purchaser shall be required to close upon a second private placement
offering (“Second Private Placement”) other than the First Private Placement of
at least $5,000,000 within nine (9) months after the Closing Date, from which
the Second Payment shall be made to Seller.

In the event that the Purchaser fails to timely: (a) close the First Private
Placement, (b) close the Second Private Placement, (c) make the First Payment,
or (d) make the Second Payment, Seller shall have the right to rescind the
transactions contemplated herein.

ARTICLE VIII
DOCUMENTS TO BE DELIVERED

8.1 Documents to be Delivered by the Seller.

At the Closing, the Seller shall deliver, or cause to be delivered, to the
Purchaser

the following:

     (a) stock certificates representing the Shares, duly endorsed in blank or
accompanied by stock transfer powers and with all requisite stock transfer tax
stamps attached;

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(b)      the certificates referred to in Section 7.1(d) and 7.1(e) hereof;

(c)      copies of all consents and waivers referred to in Section 7.1(g)
hereof;

(d)      certificate of good standing with respect to the Company issued by the
secretary of the company

(e)       such other documents as the Purchaser shall reasonably request.

8.2 Documents to be Delivered by the Purchaser.

At the Closing, the Purchaser shall deliver to the Seller the following: (a) the
certificates referred to in Section 7.2(d) hereof; and (b) such other documents
as the Seller shall reasonably request.

     Thirty day following the Closing and upon the closing of the First Private
Placement, Purchaser shall deliver to Seller the First Payment.

ARTICLE IX
INDEMNIFICATION

  9.1 Indemnification.

     (a) Subject to Section 9.2 hereof, the Seller hereby agrees to indemnify
and hold the Purchaser and its respective directors, officers, employees,
Affiliates, agents, successors and assigns (collectively, the "Purchaser
Indemnified Parties") harmless from and against:

     (i) any and all liabilities of the Company of every kind, nature and
description, absolute or contingent, existing as against the Company prior to
and including the Closing Date or thereafter coming into being or arising by
reason of any state of facts existing, or any transaction entered into, on or
prior to the Closing Date, except to the extent that the same have been fully
provided for in the Balance Sheet or disclosed in the notes thereto or were
incurred in the ordinary course of business between the Balance Sheet date and
the Closing Date;

     (ii) subject to Section 10.3, any and all losses, liabilities, obligations,
damages, costs and expenses based upon, attributable to or resulting from the
failure of any representation or warranty of the Seller set forth in Section 4
hereof, or any representation or warranty contained in any certificate delivered
by or on behalf of the Seller pursuant to this Agreement, to be true and correct
in all respects as of the date made;

     (iii) any and all losses, liabilities, obligations, damages, costs and
expenses based upon, attributable to or resulting from the breach of any
covenant or other agreement on the part of the Seller under this Agreement;

 

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     (iv) any and all notices, actions, suits, proceedings, claims, demands,
assessments, judgments, costs, penalties and expenses, including attorneys' and
other professionals' fees and disbursements (collectively, "Expenses") incident
to any and all losses, liabilities, obligations, damages, costs and expenses
with respect to which indemnification is provided hereunder (collectively,
"Losses").

     (b) Subject to Section 9.2, Purchaser hereby agrees to indemnify and hold
the Seller and its respective Affiliates, agents, successors and assigns
(collectively, the "Seller Indemnified Parties") harmless from and against:

     (i) any and all Losses based upon, attributable to or resulting from the
failure of any representation or warranty of the Purchaser set forth in Section
5 hereof, or any representation or warranty contained in any certificate
delivered by or on behalf of the Purchaser pursuant to this Agreement, to be
true and correct as of the date made;

     (ii) any and all Losses based upon, attributable to or resulting from the
breach of any covenant or other agreement on the part of the Purchaser under
this Agreement or arising from the ownership or operation of the Company from
and after the Closing Date; and

(iii) any and all Expenses incident to the foregoing.

9.2 Limitations on Indemnification for Breaches of Representations and

Warranties.

     An indemnifying party shall not have any liability under Section 9.1(a)(ii)
or Section 9.1(b)(i) hereof unless the aggregate amount of Losses and Expenses
to the indemnified parties that arise thereunder based upon, attributable to or
resulting from the failure of any representation or warranty to be true and
correct, other than the representations and warranties set forth in Sections
4.3, 4.11, 4.24 and 4.29 hereof, exceeds $5,000 (the “Basket”) and, in such
event, the indemnifying party shall be required to pay the entire amount of such
Losses and Expenses in excess of $5,000 (the “Deductible”).

  9.3 Indemnification Procedures.

     (a) In the event that any Legal Proceedings shall be instituted or that any
claim or demand ("Claim") shall be asserted by any Person in respect of which
payment may be sought under Section 9.1 hereof (regardless of the Basket or the
Deductible referred to above), the indemnified party shall reasonably and
promptly cause written notice of the assertion of any Claim of which it has
knowledge which is covered by this indemnity to be forwarded to the indemnifying
party. The indemnifying party shall have the right, at its sole option and
expense, to be represented by counsel of its choice, which must be reasonably
satisfactory to the indemnified party, and to defend against, negotiate, settle
or otherwise deal with any Claim which relates to any Losses indemnified against
hereunder. If the indemnifying party elects to defend against, negotiate, settle
or otherwise deal with any Claim which relates to any Losses indemnified against
hereunder, it shall within five (5) days (or sooner, if the nature of the Claim
so requires) notify the indemnified party of its intent to do so. If the
indemnifying party elects not to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Losses indemnified against hereunder,
fails to notify the indemnified party of its election as

 

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herein provided or contests its obligation to indemnify the indemnified party
for such Losses under this Agreement, the indemnified party may defend against,
negotiate, settle or otherwise deal with such Claim. If the indemnified party
defends any Claim, then the indemnifying party shall reimburse the indemnified
party for the Expenses of defending such Claim upon submission of periodic
bills. If the indemnifying party shall assume the defense of any Claim, the
indemnified party may participate, at his or its own expense, in the defense of
such Claim; provided, however, that such indemnified party shall be entitled to
participate in any such defense with separate counsel at the expense of the
indemnifying party if, (i) so requested by the indemnifying party to participate
or (ii) in the reasonable opinion of counsel to the indemnified party, a
conflict or potential conflict exists between the indemnified party and the
indemnifying party that would make such separate representation advisable; and
provided, further, that the indemnifying party shall not be required to pay for
more than one such counsel for all indemnified parties in connection with any
Claim. The parties hereto agree to cooperate fully with each other in connection
with the defense, negotiation or settlement of any such Claim.

     (i) For purposes of this Agreement, “Person” shall mean any natural person,
corporation, business trust, joint venture, association, company, firm,
partnership or other entity or government or Governmental Body.

     (b) After any final judgment or award shall have been rendered by a court,
arbitration board or administrative agency of competent jurisdiction and the
expiration of the time in which to appeal therefrom, or a settlement shall have
been consummated, or the indemnified party and the indemnifying party shall have
arrived at a mutually binding agreement with respect to a Claim hereunder, the
indemnified party shall forward to the indemnifying party notice of any sums due
and owing by the indemnifying party pursuant to this Agreement with respect to
such matter and the indemnifying party shall be required to pay all of the sums
so due and owing to the indemnified party by wire transfer of immediately
available funds within 10 business days after the date of such notice.

     (c) The failure of the indemnified party to give reasonably prompt notice
of any Claim shall not release, waive or otherwise affect the indemnifying
party's obligations with respect thereto except to the extent that the
indemnifying party can demonstrate actual loss or that such failure materially
prejudices the indemnifying party’s ability to defend against such Claims.

  9.4 Tax Treatment of Indemnity Payments.

     The Seller and the Purchaser agree to treat any indemnity payment made
pursuant to this Article 9 as an adjustment to the Purchase Price for federal,
state, local and foreign income tax purposes.

ARTICLE X
MISCELLANEOUS

10.1 Payment of Sales, Use or Similar Taxes.

     All value added tax, goods and services tax, and sales, use, transfer,
intangible, recordation, documentary stamp or similar Taxes or charges, of any
nature whatsoever,

 

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applicable to, or resulting from, the transactions contemplated by this
Agreement shall be borne by the Seller.

10.2 Survival of Representations and Warranties.

     The parties hereto hereby agree that the representations and warranties
contained in this Agreement or in any certificate, document or instrument
delivered in connection herewith, shall survive the execution and delivery of
this Agreement, and the Closing hereunder, regardless of any investigation made
by the parties hereto; provided, however, that any claims or actions with
respect thereto (other than claims for indemnifications with respect to the
representation and warranties contained in Sections 4.3, 4.11, 4.24 and 4.36
which shall survive for periods coterminous with any applicable statutes of
limitation) shall terminate unless within twenty-four (24) months after the
Closing Date written notice of such claims is given to the Seller or such
actions are commenced; provided, however, that the representations and
warranties contained in Sections 4.1, 4.2 and 4.3 shall survive the Closing and
remain in full force and effect without termination.

  10.3 Expenses.

     Except as otherwise provided in this Agreement, the Seller and the
Purchaser shall each bear its own expenses incurred in connection with the
negotiation and execution of this Agreement and each other agreement, document
and instrument contemplated by this Agreement and the consummation of the
transactions contemplated hereby and thereby, it being understood that in no
event shall the Company bear any of such costs and expenses.

267670

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  10.4 Specific Performance.

     The Seller acknowledges and agrees that the breach of this Agreement would
cause irreparable damage to the Purchaser and that the Purchaser will not have
an adequate remedy at law. Therefore, the obligations of the Seller under this
Agreement, including, without limitation, the Seller’s obligation to sell the
Shares to the Purchaser, shall be enforceable by a decree of specific
performance issued by any court of competent jurisdiction, and appropriate
injunctive relief may be applied for and granted in connection therewith. Such
remedies shall, however, be cumulative and not exclusive and shall be in
addition to any other remedies which any party may have under this Agreement or
otherwise.

  10.5 Further Assurances.

     The Seller and the Purchaser each agrees to execute and deliver such other
documents or agreements and to take such other action as may be reasonably
necessary or desirable for the implementation of this Agreement and the
consummation of the transactions contemplated hereby.

10.6 Submission to Jurisdiction; Consent to Service of Process; Attorney’s

Fees.

     (a) The parties hereto hereby irrevocably submit to the non-exclusive
jurisdiction of any federal or state court located within the State of Colorado
over any dispute arising out of or relating to this Agreement or any of the
transactions contemplated hereby and each party hereby irrevocably agrees that
all claims in respect of such dispute or any suit, action proceeding related
thereto may be heard and determined in such courts. The parties hereby
irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the laying of venue of any
such dispute brought in such court or any defense of inconvenient forum for the
maintenance of such dispute. Each of the parties hereto agrees that a judgment
in any such dispute may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.

     (b) Each of the parties hereto hereby consents to process being served by
any party to this Agreement in any suit, action or proceeding by the mailing of
a copy thereof in accordance with the provisions of Section 10.10.

     (c) If any legal action or any arbitration or other proceeding is brought
for the enforcement or interpretation of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with or
related to this Agreement, the successful or prevailing party shall be entitled
to recover reasonable attorneys' fees and other costs in connection with that
action or proceeding, in addition to any other relief to which it or they may be
entitled.

10.7 Entire Agreement; Amendments and Waivers.

This Agreement (including the schedules and exhibits hereto) represents the
entire understanding and agreement between the parties hereto with respect to
the subject matter hereof and can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the party against

 

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whom enforcement of any such amendment, supplement, modification or waiver is
sought. No action taken pursuant to this Agreement, including without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representation, warranty, covenant or agreement contained herein. The waiver by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a further or continuing waiver of such breach or as a
waiver of any other or subsequent breach. No failure on the part of any party to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of such
right, power or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by
law.

  10.8 Governing Law.

     This Agreement shall be governed by and construed in accordance with the
laws of the State of Colorado.

10.9 Table of Contents and Headings.

     The table of contents and section headings of this Agreement are for
reference purposes only and are to be given no effect in the construction or
interpretation of this Agreement.

10.10 Notices.

     All notices and other communications under this Agreement shall be in
writing and shall be deemed given when delivered personally or mailed by
certified mail, return receipt requested, to the parties (and shall also be
transmitted by facsimile to the Persons receiving copies thereof) at the
following addresses (or to such other address as a party may have specified by
notice given to the other party pursuant to this provision):

  (a) Purchaser:

  Zulu Energy Corp.
P.O. Box 6565
1745 Meadowlark Ln.
Sheridan, WY 82801
Attn: Paul Stroud, Chief Executive Officer
Phone: (604) 602-1717
Facsimile: (604)

  Copy to:

  (b) Seller:

  SWANSI HOLDINGS CORP
c/o Gareth Corbin, Esq., Director,
Nerine Fiduciaire S.A.,
Rue des Terreaux-du-Temple 4,

 

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  Case postale 5023,
CH - 1211 Geneva 11
Switzerland
Phone: +4122 716 0916
Facsimile: +4122 716 0917
10.11 Severability.

     If any provision of this Agreement is invalid or unenforceable, the balance
of this Agreement shall remain in effect.

  10.12 Binding Effect; Assignment.

     This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns. Nothing in this
Agreement shall create or be deemed to create any third party beneficiary rights
in any person or entity not a party to this Agreement except as provided below.
No assignment of this Agreement or of any rights or obligations hereunder may be
made by either the Seller or the Purchaser (by operation of law or otherwise)
without the prior written consent of the other parties hereto and any attempted
assignment without the required consents shall be void; provided, however, that
the Purchaser may assign this Agreement and any or all rights or obligations
hereunder (including, without limitation, the Purchaser's rights to purchase the
Shares and the Purchaser's rights to seek indemnification hereunder) to any
Affiliate of the Purchaser. Upon any such permitted assignment, the references
in this Agreement to the Purchaser shall also apply to any such assignee unless
the context otherwise requires.

[Remainder of Page Intentionally Left Blank]

 

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

ZULU ENERGY CORP.

By:         /s/ Paul Stroud 

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    Paul Stroud,      Chief Executive Officer 

 

SWANSI HOLDINGS CORP.

  By: /s/ Giuseppe Albanese
Giuseppe Albanese
Authorized Signatory

 

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                                     ANNEX A  Seller    Shares  Swansi Holdings
Corp.    50 shares Nyati Resources Botswana (PTY) Limited 

 

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