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Exhibit 10.1
 
 
 

 
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
 
This Settlement Agreement and Mutual Release (this “Settlement Agreement”) is
made and entered into as of the 24th day of June, 2015, by and among Victory
Energy Corporation, a Nevada corporation (the “Victory”) and Lucas Energy, Inc.,
a Nevada corporation (“Lucas”). Each of Victory and Lucas is referred to herein
as a “Party” and, collectively, as the “Parties.”

BACKGROUND

On February 2, 2015, Victory and Lucas entered into a Letter of Intent for
Business Combination (the “Letter of Intent”) relating to a proposed business
combination (the “Merger”) between the two parties.  Thereafter, on February 26,
2015, Victory and Lucas entered into a Pre-Merger Loan and Funding Agreement
(the “Loan Agreement”) pursuant to which Victory agreed to loan Lucas up to Two
Million Dollars ($2,000,000) as evidenced by a Delayed Draw Term Note that was
issued by Lucas to Victory on the same day (the “Lucas Note”). A total of
$600,000 in principal amount (the “Principal Amount”) has been advanced by
Victory to Lucas under the Loan Agreement.  The Principal Amount and accrued
interest thereon is secured by a pledge of Lucas Common Stock (the “Pledged
Securities”) pursuant to a Pledge Agreement entered into on the same date (the
“Pledge Agreement”) between the Parties.  The Parties and certain other
affiliates of Victory also entered into the Pre-Merger Collaboration Agreement
on February 26, 2015, as amended by Amendment No. 1 thereto, dated March 3, 2015
(the “Collaboration Agreement”).  Pursuant to the Collaboration Agreement,
Lucas’ assigned to Victory certain rights (the “Well Rights”) in five (5) Penn
Virginia well-bores (the “Penn Virginia Well-Bores”) and two (2) Earthstone
Energy/Oak Valley Resources Boggs Unit No. 1H and Boggs Unit No. 2H well-bores
(the “Oak Valley Wells”).  In connection with the assignment of the Well Rights,
Lucas obtained a partial release from Louise H. Rogers, Lucas’ secured lender
(the “Senior Lender”), and Sharon E. Conway, as Trustee, under that certain
Mortgage, Deed of Trust, Assignment, Security Agreement, Financing Statement and
Fixture Filing, dated August 13, 2013, that permitted Lucas to transfer the Well
Rights to Victory. The Collaboration Agreement provides that Victory retains the
Well Rights whether or not the Merger is consummated. The Collaboration
Agreement also required Victory to issue a contingent promissory note in the
principal amount of $250,000 to the Senior Lender (the “Rogers Note”).  In
accordance with its terms, the Rogers Note becomes due and payable, among other
times, within ninety (90) days following the termination of the Letter of
Intent.

The Parties now desire to resolve their respective claims under the Letter of
Intent, Loan Agreement, Collaboration Agreement, Pledge Agreement, Lucas Note
and Rogers Note and otherwise without admitting liability therefor, and in order
to avoid the uncertainty, expense and burden of litigation.
 
 
 

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AGREEMENT
 
 
NOW, THEREFORE, in consideration of the promises, representations, warranties
and covenants contained herein, and intending to be legally bound hereby, the
Parties agree as follows:
 
1.           Termination of Terminated Agreements; Further Assurances.
 
(a)            Subject to the terms and conditions of this Settlement Agreement
and except as expressly provided otherwise below, all rights, duties,
liabilities and obligations of each of the Parties under the Letter of Intent
and the Collaboration Agreement (such agreements being referred to herein as the
“Terminated Agreements”) are hereby terminated and cancelled as of the date
hereof, and neither of the Parties nor any of their affiliates (including,
without limitation, Aurora Energy Partners, Navitus Energy Group, and AEP
Assets, LLC), shall have any further rights, duties, liabilities or obligations
to the other Party under any of the Terminated Agreements.
 
(b)           Each of the Parties hereto agrees to execute and deliver all such
other and additional instruments and documents and do all such other acts and
things as may be necessary to more fully effectuate this Settlement Agreement.
 
2.           Obligations and Understandings of the Parties.  In consideration
for the mutual releases contained in this Settlement Agreement, the Parties
hereto agree as follows:
 
(a)           Victory shall retain ownership and control over the Penn Virginia
Well-Bores and all unpaid joint interest billings relating to the Penn Virginia
Well-Bores for operations on or after August 1, 2014 shall be payable by Victory
and all division orders with respect to the Penn Virginia Well-Bores shall
reflect Victory as a successor in interest to Lucas. In addition to the
originally assigned Penn Virginia Well-Bores, on the date hereof, Lucas shall
assign to Victory (to be held in escrow by Attorney Sharon E. Conway, as agent
for the Senior Lender in accordance with the Rogers Release) all related
acreage, reserves and proven undeveloped drilling locations remaining at
Platypus and Dingo and the proven developed Platypus Hunter 1H (the “Additional
Penn Virginia Property”) pursuant to an assignment in substantially the form of
Exhibit A to this Agreement.   The Additional Penn Virginia Property is more
specifically described as follows and on Exhibit A to this Agreement, which
includes a full property description of the Additional Penn Virginia Property:
 
Penn Virginia Well-Bores

-      Platypus Hunter 2H
-      Platypus Hunter 3H
 
-
Dingo Unit 1H – 1-H

 
-
Dingo Unit 2H – 2H

 
-
Dingo Unit 3H - 3H

Additional Penn Virginia Property

One 116.11 acre Tract #4 (lessor Jackie Robertson, et al) in the 531.67 acre
Dingo Unit, giving rise to a 3.27581% working interest and Two Tracts #8 & #9
totaling 75.0 acre (lessor Jackie Robertson, et al) in the 649.322 ac Platypus
Unit, giving rise to a 1.481330% working interest.

(b)           Neither Lucas nor its affiliates shall in anyway interfere with
Victory’s ownership and control of the Penn Virginia Well-Bores or the
Additional Penn Virginia Property and Lucas on behalf of itself and its
affiliates hereby waives any right to contest Victory’s ownership of the Penn
Virginia Well-Bores and the Additional Penn Virginia Property.  Lucas shall
notify the operator in writing that all future communications and divisions
orders are to be sent directly to Victory (c/o Aurora Energy Partners).  Lucas
shall execute and deliver all such other and additional instruments and
documents and do all such other acts and things as may be necessary to ensure
that Victory retains ownership and control over the Penn Virginia Wells-Bores
and the Additional Penn Virginia Property.
 
 
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(c)           Victory shall execute and deliver the mutual release with the
Senior Lender in the form of Exhibit B to this Agreement (the “Rogers Release”)
against execution and delivery by the Senior Lender of the same.  Lucas shall
procure the Senior Lender’s agreement to the Rogers Release and execution of the
same as required by this Agreement as soon as practicable and in any event
within two (2) business days of the date hereof. The Rogers Release shall
include a release in favor of Victory and its affiliates from the Senior Lender
from all obligations under the Rogers Note, including, without limitation,
interest, fees and penalties and from any and all claims that the Senior Lender
may have against Victory and its affiliates arising out of, or in connection
with, the Rogers Note or any of the Terminated Agreements, and the only
remaining obligations of Victory to Rogers are those set forth in the Rogers
Release. The release contained herein in favor of Lucas shall not become
effective unless and until the Senior Lender delivers to Victory and its
affiliates the Rogers Release.
 
(d)           Lucas acknowledges that Victory has paid $195,928.33 toward AFEs
with respect to the Oak Valley Wells (the “Oak Valley AFE Payment”).  As part of
this Agreement, Victory is relinquishing its rights to receive the return of the
Oak Valley AFE Payment.  Victory shall execute and deliver the mutual release
with Oak Valley in the form of Exhibit C to this Agreement (the “Oak Valley
Release”) against execution and delivery by Oak Valley of the same. Lucas shall
procure Oak Valley’s agreement to the Oak Valley Release and execution of the
same as required by this Agreement as soon as practicable and in any event
within two (2) business days of the date hereof.  The Oak Valley Release shall
include a release in favor of Victory and its affiliates from Oak Valley and its
affiliates that releases Victory and its affiliates from all obligations that
Victory and its affiliates may have relating to the Oak Valley Wells and from
any claims that Oak Valley and its affiliates may have against Victory and its
affiliates.  The release contained herein in favor of Lucas shall not become
effective unless and until Oak Valley and its affiliates deliver to Victory and
its affiliates the Oak Valley Release.
 
(e)           Without making any representation to Lucas with respect to
Victory’s title to the Oak Valley Wells, in accordance with the Oak Valley
Release, Victory shall quitclaim to Sabine River Energy, LLC any and all right,
title and interest that Victory may have to the Oak Valley Wells.  Victory
agrees to execute and deliver all such other and additional instruments and
documents and do all such other acts and things as may be necessary to
effectuate such assignment.
 
 
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(f)           Lucas acknowledges and agrees that the Principal Amount is
$600,000, that Victory has already advanced the Principal Amount to Lucas in
full, and that all obligations under the Loan Agreement and the Lucas Note are
secured by the Pledged Securities under the Pledge Agreement.  Lucas further
acknowledges that Victory has no further obligation to advance any funds to
Lucas under the Loan Agreement, the Lucas Note or otherwise.  Lucas shall
promptly (and in any event within 14 days) issue 1,101,729 shares of Lucas
Common Stock registered in the name of Victory (the “Settlement Shares”) subject
to equitable adjustment if there is a stock split, stock combination, stock
dividend, recapitalization or similar event relating to Lucas common stock prior
to the issuance of such Settlement Shares.  Lucas shall cause the Settlement
Shares to be delivered to Attorney Sharon E. Conway, as agent for the Senior
Lender, who shall hold the Settlement Shares in accordance with the Rogers
Release.  Victory shall accept the Settlement Shares in full satisfaction of
Lucas’ Obligations under the Loan Agreement and the Lucas Note. The Settlement
Shares shall upon issuance be duly issued, fully paid and non assessable.  Lucas
hereby grants to Victory piggyback registration rights on the terms described
below and upon Victory’s request shall enter into a customary agreement relating
to these rights, which will include, among other things, customary
indemnification provisions.  If at any time there is not an effective
registration statement covering the Settlement Shares and any other shares of
Lucas Common Stock held by Victory (the “Registrable Securities”) and Lucas
shall determine to prepare and file with the Securities and Exchange Commission
a registration statement relating to an offering for its own account or the
account of others under the Securities Act of 1933, as amended (the “Securities
Act”) of any of its equity securities, other than on Form S-4 or Form S-8 (each
as promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of any
entity or business or equity securities issuable in connection with stock option
or other employee benefit plans, then Lucas shall send to Victory written notice
of such determination and if, within fifteen days after receipt of such notice,
Victory shall so request in writing, Lucas shall include in such registration
statement all or any part of such Registrable Securities Victory requests to be
registered; provided, however, that Lucas shall not be required to register any
Registrable Securities pursuant to this Section 2(e) that are eligible for sale
pursuant to Rule 144 of the Securities Act without any restriction as to volume
of sales (without reference to any contractual volume limitations applicable to
Victory).
 
(g)           So long as Victory owns any Settlement Shares it shall comply with
the following limitations on the number of Settlement Shares that it may sell in
the market through a broker (not including private sales to unaffiliated third
parties):
 
(i)           Victory shall not sell more than Twenty Five Thousand (25,000)
Settlement Shares per trading day;
 
(ii)           Victory shall not sell more than One Hundred Twenty Five Thousand
(125,000) Settlement Shares per week; and
 
(iii)           Victory shall not sell more than Five Hundred Thousand (500,000)
Settlement Shares per month.
 
(iv)           If Lucas effects a stock split, stock combination, stock dividend
recapitalization or similar event affecting the number of shares of Lucas common
stock outstanding, then the aforementioned limitations on the number of
Settlement Shares that Victory may sell will be equitably adjusted such that
Victory shall be permitted to sell the same overall percentage of Settlement
Shares per period.
 
 
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(v)           Upon the written request from Lucas, Victory shall promptly
provide to Lucas brokerage statements confirming the number of Settlement Shares
that Victory has sold in any applicable period.  On the date hereof, Victory is
executing and delivering to Lucas a proxy in the form of Exhibit D.  This proxy
provides that for a period of twenty four (24) months following the date of this
Agreement, Lucas’ board of directors or its designee may vote the Settlement
Shares (including through the execution of a written consent) that Victory
continues to hold on any matter coming before the stockholders of Lucas for a
vote.  Victory shall not request and Lucas shall not provide to Victory any
material non-public information relating to Lucas or its affiliates.  So long as
Victory owns any Settlement Shares, it shall not directly or indirectly, nor
shall it cause any person acting on its behalf or pursuant to any understanding
with it to, execute any short sales (as such term is defined in rule 200 of
Regulation SHO under the Securities Exchange Act of 1934, as amended), in the
securities of Lucas.
 
(h)           Victory acknowledges and agrees that so long as the Settlement
Shares are in certificate form they shall bear any legend required by the
Securities Act of 1933, as amended and they shall bear the following legend:
 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A PROXY IN FAVOR
OF THE BOARD OF DIRECTORS OF THE ISSUER AND TO CERTAIN LIMITATIONS ON THE NUMBER
OF SECURITIES THAT MAY BE SOLD AS SPECIFIED IN THAT CERTAIN SETTLEMENT AGREEMENT
BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THIS CERTIFICATE.  A COPY OF THE
SETTLEMENT AGREEMENT MAY BE OBTAINED BY REQUESTING THE SAME FROM THE SECRETARY
OF THE ISSUER AT THE ISSUER’S EXECUTIVE OFFICES.

Victory acknowledges and agrees that if and to the extent that Victory transfers
the Settlement Shares to any third party in a transaction other than a market
transaction through a broker, it shall, as a condition to such transfer, cause
such third party to be bound by the sale restrictions and voting rights
provisions of this Settlement Agreement.  For the avoidance of doubt, if Victory
transfers the Settlement Shares in the market through a brokerage transaction to
a third party, the purchaser of such unrestricted Settlement Shares shall
acquire the same without any restriction or limitation imposed under this
Settlement Agreement.

Lucas agrees that it shall take any and all reasonable action to facilitate the
deposit of the Settlement Shares into Victory’s brokerage account if such
Settlement Shares are registered or may be sold in accordance with Rule 144 of
the Securities Act.  Such action shall include, but not be limited to, the
provision to Lucas’ transfer agent of an instruction letter in form satisfactory
to such transfer agent, the removal of the aforementioned legend (in which case,
the covenants in this Settlement Agreement relating to restrictions on sale of
the Settlement Shares and the proxy for the Settlement Shares would remain in
effect in accordance with their terms notwithstanding the removal of the
legend), the delivery to Lucas’ transfer agent of an opinion (or the acceptance
of an opinion from Victory’s counsel), and such other similar actions as may be
necessary to facilitate the deposit of the Settlement Shares into a brokerage
account.

 
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3.           Mutual Releases.
 
(a)           Subject to the terms and conditions of this Agreement, from and
after the date hereof, each of the Parties on behalf of itself and all of its
affiliates and assigns hereby fully, finally, voluntarily and irrevocably
releases and discharges the other Party and such other Party’s affiliates and
its and their officers, directors, shareholders, members, partners, employees,
legal counsel, accountants, auditors, advisors and agents  (the “Released
Parties”) to the fullest extent permitted under applicable law from any and all
claims, counterclaims, demands, causes of action, contract obligations, suits,
losses, liabilities, rights, debts, dues, sums of money, accounts, reckonings,
bonds, bills, specialties, covenants, contracts, controversies, obligations,
guarantees, endorsements, liens, security interests, agreements, promises,
variances, trespasses, judgments, extents, executions, damages, attorneys’ fees
or costs whatsoever, at law or in equity or otherwise, whether direct or
indirect, known or unknown (any of the foregoing, a “Claim” and, collectively,
the “Claims”), which such Party now owns or holds, or has at any time heretofore
owned or held, or may in the future own or hold, against the Released Parties,
or any of them, in any capacity, including as an officer, director or
stockholder of the other Party, which are or may be based upon any facts, acts,
omissions, representations, contracts, agreements, including the Terminated
Agreements, events or matters of any kind occurring or existing at any time on
or before the date of this Settlement Agreement, in each case, solely to the
extent such Claims arise from or are in any way related to Terminated Agreements
or any act or event taken by or on behalf of the other Party in furtherance of
the Terminated Agreements.
 
(b)           Waiver of Unknown Claims. In addition to each Party’s release of
Claims provided for in Section 3(a), each Party hereby expressly waives any
protection under applicable state law for releases of unknown claims. Each Party
understands the significance of his or its release of unknown claims and the
waiver of any applicable statutory protection against a release of unknown
claims.  EACH PARTY EXPRESSLY ASSUMES THE RISK OF SUCH UNKNOWN AND UNANTICIPATED
CLAIMS AND AGREES THAT THIS SETTLEMENT AGREEMENT APPLIES TO ALL CLAIMS, AS
DEFINED UNDER SECTION 3(a), WHETHER KNOWN, UNKNOWN, OR UNANTICIPATED.
 
4.           Waiver of Suit.  For the consideration and mutual promises
specified herein and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, each Party agrees to waive,
release, promise and agrees not to bring or pursue any judicial, quasi-judicial
or administrative action against the other Party for any reason whatsoever
arising out of the Claims released herein up to and including the date of this
Settlement Agreement.  Each party further acknowledges and agrees that it has
not already filed or otherwise commenced any such action.  For the avoidance of
doubt, any action for enforcement of this Settlement Agreement is expressly
excluded from this waiver provision.
 
 
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5.           Representations and Warranties.
 
(a)           Each Party represents and warrants to the other Party that it has
the requisite power to enter into this Settlement Agreement and to carry out its
obligations hereunder and that the terms of this Settlement Agreement have been
fully disclosed to the Board of Directors of such Party and that the requisite
approvals have been obtained, prior to its execution and that this Settlement
Agreement does not conflict with, or result in a breach of, any other agreement
to which such Party is a party.
 
(b)           Each Party represents and warrants to the other Party that this
Settlement Agreement has been duly executed and delivered and constitutes a
valid and binding obligation enforceable in accordance with its terms.
 
6.           Entire Agreement.  This Settlement Agreement constitutes the
entire, exclusive and final agreement among the parties and supersedes any and
all prior agreements, discussions, representations and warranties among the
parties with respect to the matters set forth herein.  The parties have not
relied upon any statements or representations made by any party outside the
contents of this Settlement Agreement.
 
7.           Choice of Law.  This Settlement Agreement shall be enforced,
governed by and construed in accordance with the laws of the State of Texas
without regard to principles of conflict of laws.
 
8.           Counterparts.  This Settlement Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original but all
of which together shall constitute but one agreement.
 
9.           Severability.  If any provision of this Settlement Agreement is
determined to be unlawful or otherwise unenforceable, the remaining provisions
of this Settlement Agreement shall nevertheless continue in full force and
effect.
 
10.           Parties in Interest; Assignment; Third Party Beneficiaries.  This
Settlement Agreement is binding upon the parties and their respective
successors, heirs, legal representatives and permitted assigns.  Aurora Energy
Partners, Navitus Energy Group and AEP Assets, LLC and each of their respective
officers, directors, managers and owners are each intended third party
beneficiaries of this Settlement Agreement and may enforce their rights under
this Settlement Agreement.
 
11.           No Admission of Liability or Wrongdoing.  This Settlement
Agreement and the negotiations and discussions leading up to this Settlement
Agreement effect the settlement of claims which are denied and contested, and do
not constitute, nor shall they be construed as, an admission of liability by the
parties.  This Settlement Agreement is made solely for the purpose of avoiding
the burden and expense of litigation, which would be imposed on the parties if
the disputes between them remained unsettled.  This Settlement Agreement does
not constitute an admission by any of the parties hereto that they have engaged
in any unlawful act.  Each of the parties hereto expressly deny that they have
engaged in any unlawful act and deny liability for all claims any other party
had, has, or may have against them.
 
 
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12.           Indemnification and Contribution.  Each Party (an “Indemnitor”)
agrees to indemnify the other Party and its affiliates and its and their
officers, directors, employees, agents, shareholders, members and/or partners
(collectively referred to as the “Indemnitees”) against, and hold them harmless
of and from, any and all loss, liability, cost, damage and expense, including
without limitation, reasonable counsel fees, which the Indemnitees may suffer or
incur by reason of any action, claim or proceeding brought against the
Indemnitees arising out of or relating in any way to a breach by the Indemnitor
of any representation, warranty or covenant contained in this Settlement
Agreement. If the indemnification provided for in Section 12 is applicable, but
for any reason is held to be unavailable, the Indemnitor shall contribute such
amounts as are just and equitable to pay, or to reimburse the Indemnitees for,
the aggregate of any and all losses, liabilities, costs, damages and expenses,
including counsel fees, actually incurred by the Indemnitees as a result of or
in connection with, and any amount paid in settlement of, any action, claim or
proceeding arising out of or relating in any way to any actions or omissions of
the Indemnitor.  The provisions of this Section 12 shall survive any termination
of this Agreement.
 
13.           Construction.  This Settlement Agreement shall not be construed
against the party preparing it, but shall be construed as if the parties
collectively prepared it and any uncertainty or ambiguity shall not be
interpreted against any party.
 
14.           Modifications; Waiver.  This Settlement Agreement may not be
modified orally.  No breach of any provision hereof may be waived unless in
writing.  Waiver of any breach shall not be deemed to be a waiver of any other
breach of the same or of any other provision hereof.  All modifications to this
Settlement Agreement must be in writing and signed by the Party to be charged.
 
15.           No Assignments. Each of the Parties hereby represents and warrants
to the other Party that there has been no assignment or transfer whatsoever of
any of the Claims released herein.  Each Party agrees to defend and indemnify
the other Party and the other persons and entities released herein against any
Claim based upon, arising out of or in connection with any such assignment or
transfer.
 
16.           Attorneys' Fees.  If any action is brought for the enforcement of
this Settlement Agreement or in connection with any dispute arising out of it or
the claims which are the subject of this Settlement Agreement, the prevailing
party shall be entitled to recover reasonable attorneys' fees and any other
costs incurred in such litigation in addition to any other relief to which the
prevailing party may be entitled.
 
17.           Advice of Counsel.  Each party to this Settlement Agreement has
had the opportunity to discuss the matter with legal counsel, and enters into
this Settlement Agreement only after such consultation.
 
18.           Waiver Of Jury Trial.  EACH PARTY EXPRESSLY, IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS SETTLEMENT AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
 
 
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19.           Notices.  All notices and other communications hereunder shall be
in writing to the parties at the addresses specified on the signature pages
hereto.
 
 
[Signature page follows]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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IN WITNESS WHEREOF, the parties have executed this Settlement Agreement as of
the date first above written.
 

 

   
Victory Energy Corporation

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

3355 Bee Caves Road, Suite 608
Austin, TX  78746

Lucas Energy, Inc.

By:/s/ Anthony Schnur                                       
Name: Anthony Schnur
Title: Chief Executive Officer

3555 Timmons Lane, Suite 1550
Houston, TX 77027
               

 

Acknowledgement of Counsel:
 
Each of the undersigned legal counsel to Victory and to Lucas by signing this
Settlement Agreement below acknowledge that they approve the Settlement
Agreement as to form:
 
 

 

 

/s/ David M. Loev                                     /s/ David
McCall                                        David Loev of The Loev Law Firm,
PC, David McCall Counsel to Lucas Counsel to Victory Approving as to form only
Approving as to form only

 

             

 
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EXHIBIT A

Assignment of Additional Penn Virginia Property

 
PARTIAL ASSIGNMENT AND BILL OF SALE
 

STATE OF TEXAS
§
     
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF KARNES
§
 

THAT, LUCAS ENERGY, INC., a Nevada corporation, whose mailing address is 3555
Timmons Lane, Suite 1550, Houston, Texas 77027 (hereinafter referred to as
“Assignor”) for sufficient consideration received from SABINE RIVER ENERGY, LLC,
a Texas limited liability company, whose mailing address is 1400 Woodloch Forest
Drive, Suite 300, The Woodlands, Texas 77380-1197 (hereinafter referred to as
“Assignee”), does hereby transfer, assign, sell, bargain and convey unto
Assignee, subject as herein provided, all of Assignor’s right, title and
interest in the oil and/or gas leases listed in Exhibit “A” attached hereto and
made a part hereto (said leases being hereinafter referred to as “Leases”),
insofar and only insofar as the leases cover the rights below the Austin Chalk
formation.  The Austin Chalk formation shall mean the correlative interval from
9,982 feet to 10,294 feet as shown on the Baker-Hughes High Definition Induction
Log dated February 4, 2009 of the EOG Resources, Inc. Milton Unit Well No. 1,
API No. 4225531608, Eagleville (Eagle Ford) Field, Abstraction 247, Karnes
County, Texas.

To have and to hold the Leases and interest forever, subject to the following:

1.  This Partial Assignment and Bill of Sale is subject to the terms and
provisions of the Leases and Assignee hereby assumes all express and implied
covenants thereunder.

2.  This Partial Assignment and Bill of Sale shall be binding upon and inure to
the benefit of Assignee and Assignor and their respective successors, heirs and
assigns.

3.  This Partial Assignment and Bill of Sale may be executed in any number of
counterparts, and each counterpart may be recorded separately or may be combined
to form one (1) instrument for recording purposes.

Executed by Assignor and Assignees on the dates reflected in their respective
acknowledgments, but effective as of June 1, 2015.

ASSIGNOR

LUCAS ENERGY, INC.

By: _________________________________
Anthony Schnur
Chief Executive Officer

 
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ASSIGNEE

SABINE RIVER ENERGY, LLC

By: _________________________________
Christopher E. Cottrell
Executive Vice President Land & Marketing

 
ACKNOWLEDGMENTS
 

STATE OF TEXAS

COUNTY OF MONTOGMERY

This instrument was acknowledged before me on this _____ day of _______________,
2015 by Christopher E. Cottrell, who is Executive Vice President Land &
Marketing of SABINE RIVER ENERGY, LLC, a Texas limited liability company, on
behalf of said limited liability company.

My Commission Expires:
___________                     ____________________________________
Notary Public for the State of Texas
County of Montgomery
Printed Name: ________________________

STATE OF TEXAS

COUNTY OF HARRIS

This instrument was acknowledged before me on this _____ day of
_________________, 2015 by Anthony Schnur, who is the Chief Executive Officer of
LUCAS ENERGY, INC., a Nevada corporation, on behalf of said corporation.

My Commission Expires:
_____________                ____________________________________
Notary Public for the State of Texas
County of Harris

Printed Name: ________________________

 

 
 
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EXHIBIT A

OIL AND GAS LEASES:
     
Lessor:
Leland Copeland
Lessee:
Lucas Energy, Inc.
Effective Date:
July 16, 2013
Memorandum Recorded:
Volume 1134, Page 651
Description:
143.00 acres more or less, out of the Thomas P. Crosby Survey,
 
Abstract 66, Karnes County, Texas
   
Lessor:
Glenn D. Boggs, Jr. and Wife, Betty J. Boggs
Lessee:
Lucas Energy, Inc.
Effective Date:
July 16, 2013
Memorandum Recorded:
Volume 1134, Page 653
Description:
143.00 acres more or less, out of the Thomas P. Crosby Survey,
 
Abstract 66, Karnes County, Texas
   
Lessor:
Red Crest Trust, JPMorgan Chase Bank, N. A. as Trustee
Lessee:
Billy R. Wilson
Effective Date:
March 25, 2008
Recorded:
Volume 873, Page 394
Description:
250.00 acres more or less, out of the Thomas P. Crosby Survey,
 
Abstract 66, Karnes County, Texas
   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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EXHIBIT B

Form of Rogers Release

For Purposes of Settlement Discussions;
Subject to Texas Rule of Evidence 408 and
Federal Rule of Evidence 408

 
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
 
This Settlement Agreement and Mutual Release (this “Settlement Agreement”) is
made and entered into as of the __ day of June, 2015, by and among Victory
Energy Corporation, a Nevada corporation (the “Victory”) and Louise H. Rogers,
an individual (“Rogers”). Each of Victory and Rogers is referred to herein as a
“Party” and, collectively, as the “Parties.”

BACKGROUND

On February 2, 2015, Victory and Lucas Energy, Inc. (“Lucas”) entered into a
Letter of Intent for Business Combination (the “Letter of Intent”) relating to a
proposed business combination (the “Merger”) between the two
parties.  Thereafter, Lucas, Victory and certain other affiliates of Victory
entered into the Pre-Merger Collaboration Agreement on February 26, 2015, as
amended by Amendment No. 1 thereto, dated March 3, 2015 (the “Collaboration
Agreement”).  Pursuant to the Collaboration Agreement, Lucas assigned to Victory
certain rights (the “Well Rights”) in five (5) Penn Virginia well-bores and two
(2) Earthstone Energy/Oak Valley Resources Boggs Unit No. 1H and Boggs Unit No.
2H well-bores.  In connection with the assignment of the Well Rights, Lucas
obtained a partial release from Rogers, Lucas’ secured lender, and Sharon E.
Conway, as Trustee, under that certain Mortgage, Deed of Trust, Assignment,
Security Agreement, Financing Statement and Fixture Filing, dated August 13,
2013, that permitted Lucas to transfer the Well Rights to Victory. Among other
things, the Collaboration Agreement required Victory to issue a contingent
promissory note in the principal amount of $250,000 to Rogers (the “Rogers
Note”).  In accordance with its terms, the Rogers Note becomes due and payable,
among other times, within ninety (90) days following the termination of the
Letter of Intent.

On May 11, 2015, Victory notified Lucas that Victory does not intend to proceed
with the Merger and thereby terminated the Letter of Intent.

The Parties now desire to resolve their respective claims under the
Collaboration Agreement and the Rogers Note and otherwise without admitting
liability therefor, and in order to avoid the uncertainty, expense and burden of
litigation.
 
AGREEMENT
 
 
NOW, THEREFORE, in consideration of the promises, representations, warranties
and covenants contained herein, and intending to be legally bound hereby, the
Parties agree as follows:
 
1.           Termination of Rogers Note; Further Assurances.
 
(a)            Subject to the terms and conditions of this Settlement Agreement
and except as expressly provided otherwise below, all rights, duties,
liabilities and obligations of each of the Parties under the Rogers Note is
hereby terminated and cancelled as of the date hereof, and neither of the
Parties nor any of their affiliates, shall have any further rights, duties,
liabilities or obligations to the other Party under the Rogers Note.
 
 
 
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For Purposes of Settlement Discussions;
Subject to Texas Rule of Evidence 408 and
Federal Rule of Evidence 408
 
(b)           Each of the Parties hereto agree to execute and deliver all such
other and additional instruments and documents and do all such other acts and
things as may be necessary to more fully effectuate this Settlement Agreement.
 
2.           Victory Payment Obligation. On or before July 15, 2015, Victory
shall pay to Rogers Two Hundred and Fifty Three Thousand Seven Hundred Fifty
Dollars ($253,750) in immediately available funds to an account specified by
Rogers to Victory in writing; provided, however, that if Victory fails to make
such payment on or before July 15, 2015 it shall be in breach of this Settlement
Agreement and default interest on such amount shall accrue at a per diem rate of
$126.88 (i.e., 18% per annum).  Victory agrees that Roger’s counsel, Attorney
Sharon E. Conway, may hold in escrow (i) the assignment of the additional Penn
Virginia properties contemplated by Section 2(a) of the VL Settlement Agreement
(as defined below), and (ii) the Settlement Shares (as defined in the VL
Settlement Agreement), until such time as Victory pays to Rogers the amounts due
and payable to Rogers pursuant to this Section 2 and Rogers shall immediately
release such assignment once such payment has been made in full.
 
3.           Concurrent Settlement Agreements. This Settlement Agreement has
been negotiated concurrently with (a) that certain settlement agreement being
entered into on or about the date hereof between Victory and Lucas (the “VL
Settlement Agreement”), and (b) that certain settlement agreement being entered
into on or about the date hereof among Oak Valley Operating LLC and its
affiliates, Lucas and its affiliates and Victory and its affiliates (the “Oak
Valley Settlement Agreement”).  Notwithstanding any provision herein contained
to the contrary, this Settlement Agreement shall automatically terminate and be
of no force or effect if each of the VL Settlement Agreement and the Oak Valley
Settlement Agreement is not executed by all of the parties thereto on or before
the expiration of two (2) business days after the date hereof.
 
 
 
 
 
 
 
 
 
 
 
 
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For Purposes of Settlement Discussions;
Subject to Texas Rule of Evidence 408 and
Federal Rule of Evidence 408
 
4.           Mutual Releases.
 
(a)           Subject to the terms and conditions of this Agreement, from and
after the date hereof, each of the Parties on behalf of itself and all of its
affiliates and assigns hereby fully, finally, voluntarily and irrevocably
releases and discharges the other Party and such other Party’s affiliates
(including, specifically and without limitation, in the case of Victory, Aurora
Energy Partners, Navitus Energy Group and AEP Assets, LLC) and its and their
officers, directors, shareholders, members, partners, employees, legal counsel,
accountants, auditors, advisors and agents  (the “Released Parties”) to the
fullest extent permitted under applicable law from any and all claims,
counterclaims, demands, causes of action, contract obligations, suits, losses,
liabilities, rights, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies, obligations,
guarantees, endorsements, liens, security interests, agreements, promises,
variances, trespasses, judgments, extents, executions, damages, attorneys’ fees
or costs whatsoever, at law or in equity or otherwise, whether direct or
indirect, known or unknown (any of the foregoing, a “Claim” and, collectively,
the “Claims”), which such Party now owns or holds, or has at any time heretofore
owned or held, or may in the future own or hold, against the Released Parties,
or any of them, in any capacity, including as an officer, director or
stockholder of the other Party, which are or may be based upon any facts, acts,
omissions, representations, contracts, agreements, including the Rogers Note and
the Collaboration Agreement, events or matters of any kind occurring or existing
at any time on or before the date of this Settlement Agreement.
 
(b)           Waiver of Unknown Claims. In addition to each Party’s release of
Claims provided for in Section 4(a), each Party hereby expressly waives any
protection under applicable state law for releases of unknown claims. Each Party
understands the significance of his or its release of unknown claims and the
waiver of any applicable statutory protection against a release of unknown
claims.  EACH PARTY EXPRESSLY ASSUMES THE RISK OF SUCH UNKNOWN AND UNANTICIPATED
CLAIMS AND AGREES THAT THIS SETTLEMENT AGREEMENT APPLIES TO ALL CLAIMS, AS
DEFINED UNDER SECTION 4(a), WHETHER KNOWN, UNKNOWN, OR UNANTICIPATED.
 
5.           Waiver of Suit.  For the consideration and mutual promises
specified herein and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, each Party agrees to waive,
release, promise and agrees not to bring or pursue any judicial, quasi-judicial
or administrative action against the other Party for any reason whatsoever
arising out of the Claims released herein up to and including the date of this
Settlement Agreement.  Each party further acknowledges and agrees that it has
not already filed or otherwise commenced any such action.  For the avoidance of
doubt, any action for enforcement of this Settlement Agreement is expressly
excluded from this waiver provision.
 
6.           Representations and Warranties.
 
(a)           Each Party represents and warrants to the other Party that it has
the requisite power to enter into this Settlement Agreement and to carry out its
obligations hereunder and that the terms of this Settlement Agreement have been
fully disclosed to the Board of Directors, if applicable, of such Party and that
the requisite approvals have been obtained, prior to its execution and that this
Settlement Agreement does not conflict with, or result in a breach of, any other
agreement to which such Party is a party.
 
 
 
 
 
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For Purposes of Settlement Discussions;
Subject to Texas Rule of Evidence 408 and
Federal Rule of Evidence 408
 
(b)           Each represents and warrants to the other Party that this
Settlement Agreement has been duly executed and delivered and constitutes a
valid and binding obligation enforceable in accordance with its terms.
 
7.           Entire Agreement.  This Settlement Agreement constitutes the
entire, exclusive and final agreement among the parties and supersedes any and
all prior agreements, discussions, representations and warranties among the
parties with respect to the matters set forth herein.  The parties have not
relied upon any statements or representations made by any party outside the
content of this Settlement Agreement.
 
8.           Choice of Law.  This Settlement Agreement shall be enforced,
governed by and construed in accordance with the laws of the State of Texas
without regard to principles of conflict of laws.
 
9.           Counterparts.  This Settlement Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original but all
of which together shall constitute but one agreement.
 
10.           Severability.  If any provision of this Settlement Agreement is
determined to be unlawful or otherwise unenforceable, the remaining provisions
of this Settlement Agreement shall nevertheless continue in full force and
effect.
 
11.           Parties in Interest; Assignment; Third Party Beneficiaries.  This
Settlement Agreement is binding upon the parties and their respective
successors, heirs, legal representatives and permitted assigns.  Aurora Energy
Partners, Navitus Energy Group and AEP Assets, LLC and each of their respective
officers, directors, managers and owners are each intended third party
beneficiaries of this Settlement Agreement and may enforce their rights under
this Settlement Agreement.
 
12.           No Admission of Liability or Wrongdoing.  This Settlement
Agreement and the negotiations and discussions leading up to this Settlement
Agreement effect the settlement of claims which are denied and contested, and do
not constitute, nor shall they be construed as, an admission of liability by the
parties.  This Settlement Agreement is made solely for the purpose of avoiding
the burden and expense of litigation, which would be imposed on the parties if
the disputes between them remained unsettled.  This Settlement Agreement does
not constitute an admission by any of the parties hereto that they have engaged
in any unlawful act.  Each of the parties hereto expressly deny that hey have
engaged in any unlawful act and deny liability for all claims any other party
had, has, or may have against them.
 
13.           Indemnification and Contribution.  Each Party (an “Indemnitor”)
agrees to indemnify the other Party and its affiliates and its and their
officers, directors, employees, agents, shareholders, members and/or partners
(collectively referred to as the “Indemnitees”) against, and hold them harmless
of and from, any and all loss, liability, cost, damage and expense, including
without limitation, reasonable counsel fees, which the Indemnitees may suffer or
incur by reason of any action, claim or proceeding brought against the
Indemnitees arising out of or relating in any way to a breach by the Indemnitor
of any representation, warranty or covenant contained in this Settlement
Agreement. If the indemnification provided for in Section 13 is applicable, but
for any reason is held to be unavailable, the Indemnitor shall contribute such
amounts as are just and equitable to pay, or to reimburse the Indemnitees for,
the aggregate of any and all losses, liabilities, costs, damages and expenses,
including counsel fees, actually incurred by the Indemnitees as a result of or
in connection with, and any amount paid in settlement of, any action, claim or
proceeding arising out of or relating in any way to any actions or omissions of
the Indemnitor.  The provisions of this Section 13 shall survive any termination
of this Agreement.
 
 
 
 
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For Purposes of Settlement Discussions;
Subject to Texas Rule of Evidence 408 and
Federal Rule of Evidence 408
 
14.           Construction.  This Settlement Agreement shall not be construed
against the party preparing it, but shall be construed as if the parties
collectively prepared it and any uncertainty or ambiguity shall not be
interpreted against any party.
 
15.           Modifications; Waiver.  This Settlement Agreement may not be
modified orally.  No breach of any provision hereof may be waived unless in
writing.  Waiver of any breach shall not be deemed to be a waiver of any other
breach of the same or of any other provision hereof.  All modifications to this
Settlement Agreement must be in writing and signed by all of the Parties hereto.
 
16.           No Assignments. Each of the Parties hereby represents and warrants
to the other Party that there has been no assignment or transfer whatsoever of
any of the Claims released herein.  Each Party agrees to defend and indemnify
the other Party and the other persons and entities released herein against any
Claim based upon, arising out of or in connection with any such assignment or
transfer.
 
17.           Attorneys' Fees.  If any action is brought for the enforcement of
this Settlement Agreement or in connection with any dispute arising out of it or
the claims which are the subject of this Settlement Agreement, the prevailing
party shall be entitled to recover reasonable attorneys' fees and any other
costs incurred in such litigation in addition to any other relief to which the
prevailing party may be entitled.
 
18.           Advice of Counsel.  Each party to this Settlement Agreement has
had the opportunity to discuss the matter with legal counsel, and enters into
this Settlement Agreement only after such consultation.
 
19.           Waiver Of Jury Trial.  EACH PARTY EXPRESSLY, IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS SETTLEMENT AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
 
20.           Notices.  All notices and other communications hereunder shall be
in writing to the parties at the addresses specified on the signature pages
hereto.
 
 
[Signature page follows]
 
 
 
 
 
 
 
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For Purposes of Settlement Discussions;
Subject to Texas Rule of Evidence 408 and
Federal Rule of Evidence 408
 
IN WITNESS WHEREOF, the parties have executed this Settlement Agreement as of
the date first above written.
 

 

   
Victory Energy Corporation

By:                                           
Name: Kenneth Hill
Title: Chief Executive Officer

3355 Bee Caves Road, Suite 608
Austin, TX  78746

Louise H. Rogers

 

c/o Sharon E. Conway
Attorney at Law
2441 High Timbers, Suite 410
The Woodlands, Texas  77380-1052
               

 

Acknowledgement of Counsel:
 
Each of the undersigned legal counsel to Victory and to Rogers by signing this
Settlement Agreement below acknowledge that they approve the Settlement
Agreement as to form:
 
 

 
 

______________________________ ______________________________ Sharon E. Conway
David McCall Counsel to Rogers Counsel to Victory Approving as to form only
Approving as to form only

 

 
                                                                                                                                                                                                                                                               
 
 
 
 
 
 
 
 

 
 
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EXHIBIT C

Form of Oak Valley Release

COMPROMISE SETTLEMENT AGREEMENT AND
 
MUTUAL GENERAL RELEASE
 

 
I.
PARTIES
 
The parties to this Compromise Settlement Agreement and Mutual General Release
are:

1.01           Earthstone Operating, LLC; Earthstone Energy, Inc.; Oak Valley
Resources, LLC; Oak Valley Operating, LLC; and Sabine River Energy, LLC
(collectively, “Earthstone”).
 
1.02           Lucas Energy, Inc. (“LEI”).
 
1.03           Victory Energy Corporation; AEP Assets LLC, and Aurora Energy
Partners (together, “Victory”).
 
II.
DEFINITIONS
 
2.01           “JOA” means that certain Joint Operating Agreement which appears
as Exhibit “C” to the Participation Agreement, as defined below.
 
2.02           “Earthstone Parties” means Earthstone and its past and present
principals, officers, directors, shareholders, employees, agents,
representatives, members, parents, subsidiaries, affiliates, assigns,
predecessors and successors.
 
2.03           “LEI Parties” means LEI and its past and present principals,
officers, directors, shareholders, employees, agents, representatives, members,
parents, subsidiaries, affiliates, assigns, and successors.
 
2.04           “Participation Agreement” means that certain Participation
Agreement, dated August 1, 2014, between Earthstone and LEI.
 
2.05           “Victory Assignment” means the assignment to Victory of the
Subject Interests, as defined below, pursuant to that certain Partial Assignment
and Bill of Sale of Wellbore Rights dated effective as of February 27, 2015 and
recorded in Volume 1223, Page 133 in the Official Records of Karnes County,
Texas.
 
2.06           “Victory Parties” means Victory and its past and present
principals, officers, directors, shareholders, employees, agents,
representatives, members, parents, subsidiaries, affiliates, assigns, and
successors.
 
2.07             “Settlement Agreement” means this Compromise Settlement
Agreement and Mutual General Release.
 
 
COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
 
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2.08           “Subject Interests” means a purported fifty percent (50%)
Working/Leasehold Interest in and to the Boggs #1H and #2H wellbore rights,
along with one hundred feet (100’) laterally perpendicular to said wellbores
that were assigned by Lucas to Victory pursuant to the Victory Assignment.
 
2.09           “Parties” means Earthstone, LEI, and Victory, each of whom shall
be individually referred to as a “Party.”
 
2.10           The “Dispute” means all claims and causes of action of any kind
whatsoever which the Parties have or may have in the future against each other,
based on any acts or events that have occurred on or before the Effective Date,
as defined below, related to or arising out of those facts set forth in Section
III below, except as otherwise provided in this Settlement Agreement.
 
2.11           “Effective Date” means the date on which this Settlement
Agreement is executed by LEI, Earthstone and Victory.  If executed on different
dates, the Effective Date shall be the date that this Agreement is executed by
the last party to any such agreement to execute.
 
2.12           “VL Settlement Agreement”  means that certain Settlement
Agreement and Mutual Release between Victory and Lucas, including all exhibits
thereto.
 
2.13           “Rogers Release” means the full mutual release, including a
release in favor of Victory and its affiliates from Louis H. Rogers, Lucas’
senior  secured lender that is contemplated by the VL Settlement Agreement.
 
III.
Background
 
3.01           Each of the Parties has informed the other Parties that it
intends to assert claims against the other Parties for various reasons,
including, without limitation, claims arising out of the following agreements,
conveyances or interests:
 
 
(a)
the Participation Agreement;

 
 
(b)
the JOA;

 
 
(c)
the letter of intent dated August 4, 2014 between LEI and the Earthstone
Parties;

 
 
(d)
the Partial Assignment dated effective August 1, 2014, and recorded in Volume
1196, Page 702 of the Official Records of Karnes County;

 
 
(e)
the Victory Assignment;

 
 
(f)
the letter agreement dated February 9, 2015, between LEI and the Earthstone
Parties;

 
 
(g)
a letter dated May 1, 2015, from the Earthstone Parties to LEI; and

 
 
(h)
an oil and gas lease, the memorandum of which is recorded as Instrument No.
201500142279 of the Official Records of Karnes County (the “Boggs Lease”).

 
 
All of the Parties dispute the claims that each other Party has made against
it.  The parties wish to resolve the respective claims by entering into this
Agreement without admitting liability therefor, and in order to avoid the
uncertainty, expense and burden of litigation.  Concurrently, one or more of the
Parties is entering into the Lucas Settlement, the VL Settlement Agreement and
the Rogers Release.
 
 
COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
 
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Scope of Settlement
 
3.02           Bona fide disputes and controversies may exist between the
Parties, both as to the fact and extent of liability, if any, and as to the fact
and extent of damages, if any, and by reason of such disputes and controversies,
the Parties to this Settlement Agreement desire to settle all claims and causes
of action of any kind whatsoever which the Parties have or may have in the
future against each other, based on any acts or events that have occurred on or
before the Effective Date, except as otherwise provided in this Settlement
Agreement.
 
3.03           The Parties intend that the full terms and conditions of the
compromise and settlement be set forth in this Settlement Agreement.
 
In consideration of the agreements contained in this Settlement Agreement and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows:
 
IV.
REPRESENTATIONS AND WARRANTIES
 
The following representations and warranties shall survive the execution of this
Settlement Agreement and the completion of the settlement provided below.
 
Authority/Capacity
 
4.01           Each Party to this Settlement Agreement warrants and represents
that it has the power and authority to enter into this Settlement Agreement and
that this Settlement Agreement and all documents delivered pursuant to this
Settlement Agreement are valid, binding, and enforceable upon him or it.
 
4.02           Each Party to this Settlement Agreement warrants and represents
that no consent, approval, authorization or order of, and no notice to, or
filing with any court, governmental authority, person or entity is required for
the execution, delivery, and performance of this Settlement Agreement.
 
4.03           Earthstone warrants and represents that it is not the fiduciary
of LEI or Victory; no fiduciary relationship exists between Earthstone and LEI
or between Earthstone and Victory; and this is an arm’s length transaction.  LEI
warrants and represents that it is not the fiduciary of Earthstone or Victory;
no fiduciary relationship exists between LEI and Earthstone or between LEI and
Victory; and this is an arm’s length transaction.  Victory warrants and
represents that it is not the fiduciary of LEI or Earthstone; no fiduciary
relationship exists between Victory and LEI or between Victory and Earthstone;
and this is an arm’s length transaction.
 
4.04           Earthstone warrants and represents that it is duly formed under
the laws of the state of its organization and is duly organized and validly
existing in good standing under such laws.  Earthstone warrants and represents
that it has the power and authority to execute and deliver this Settlement
Agreement and all other agreements and instruments to be executed by it as
contemplated by this Settlement Agreement and to carry out the transactions and
perform its obligations provided for in this Settlement Agreement and in those
other agreements and instruments.  The execution and delivery of this Settlement
Agreement and such other agreements and instruments and the consummation of the
transactions contemplated by this Settlement Agreement and such other agreements
and instruments have been duly and validly authorized by all necessary action on
the part of Earthstone.
 
 
COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
 
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4.05           LEI warrants and represents that it is duly formed under the laws
of the state of its organization and is duly organized and validly existing in
good standing under such laws.  LEI warrants and represents that it has the
power and authority to execute and deliver this Settlement Agreement and all
other agreements and instruments to be executed by it as contemplated by this
Settlement Agreement and to carry out the transactions and perform its
obligations provided for in this Settlement Agreement and in those other
agreements and instruments.  The execution and delivery of this Settlement
Agreement and such other agreements and instruments and the consummation of the
transactions contemplated by this Settlement Agreement and such other agreements
and instruments have been duly and validly authorized by all necessary action on
the part of LEI.
 
4.06           Victory warrants and represents that it is duly formed under the
laws of the state of its organization and is duly organized and validly existing
in good standing under such laws.  Victory warrants and represents that it has
the power and authority to execute and deliver this Settlement Agreement and all
other agreements and instruments to be executed by it as contemplated by this
Settlement Agreement and to carry out the transactions and perform its
obligations provided for in this Settlement Agreement and in those other
agreements and instruments.  The execution and delivery of this Settlement
Agreement and such other agreements and instruments and the consummation of the
transactions contemplated by this Settlement Agreement and such other agreements
and instruments have been duly and validly authorized by all necessary action on
the part of Victory.
 
V.
SETTLEMENT TERMS
 
This Settlement Agreement has been negotiated concurrently with (a) the VL
Settlement Agreement, (b) the Rogers Release and (c) that certain Compromise
Settlement Agreement and General Release by and between Earthstone and LEI of
even date herewith (the “Lucas Settlement”).  Notwithstanding any provision
herein contained to the contrary, this Settlement Agreement shall automatically
terminate and be of no force or effect if (a) the VL Settlement Agreement, (b)
the Rogers Release or (c) the Lucas Settlement is not executed by all of the
parties thereto on or before the expiration of two (2) business days after the
Effective Date.
 
In reliance upon the representations, warranties, and covenants in this
Settlement Agreement, and concurrently with the execution and delivery of this
Settlement Agreement, the Parties have settled and compromised their claims and
causes of action against each other as follows:
 
 
COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
 
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Payment, Reassignment & Non-Consent
 
5.01           LEI shall be entitled to receive from Earthstone $195,928.33,
being the sum previously advanced to Earthstone on behalf of LEI (the “JIB
Return”); and Earthstone shall be entitled to receive from LEI $141,907.50 (the
“Title Failure Return”).
 
THEREFORE, Earthstone shall pay to LEI the difference between the JIB Return and
the Title Failure Return, being FIFTY-FOUR THOUSAND TWENTY AND 83/100 DOLLARS
($54,020.83) (the “Payment”).
 
5.02           Earthstone shall deliver the Payment by wire transfer of
immediately available funds in U.S. dollars to the account of LEI to the bank or
account specified as follows:
 
_________________
_________________
_________________
_________________

5.03           The parties hereby agree that, notwithstanding the election
period set forth in the Letter dated May 1, 2015 (described in Section 3.01(g)
above), LEI is hereby deemed a Non-Consenting Party as defined under the terms
of the JOA, for all purposes.
 
5.04           LEI shall execute and deliver an irrevocable election not to
participate in the Boggs #1H and #2H Wells (or any AFEs related thereto) as
proposed under the above described May 1, 2015 Letter.  LEI will further
acknowledge in such election that it and its interests in the Boggs #1H and #2H
wells are subject to the non-consent penalties set forth in the JOA for failure
to participate in such wells.
 
5.05           Victory shall execute and record a “quit claim” assignment of
leasehold working interest in favor of Sabine River Energy, LLC, effective as of
February 27, 2015, substantially in the form attached hereto as Exhibit A (the
“Reassignment”), of all of the right, title and interest conveyed pursuant to
the Victory Assignment.  LEI shall warrant title to the Subject Interests unto
Sabine River Energy, LLC, against all persons claiming by, through and under LEI
and/or Victory, but not otherwise.
 
5.06           As described in Section 5.02 above, the Payment shall be
transmitted to the account specified by LEI within two (2) business days after
receipt by Earthstone’s counsel, Thompson & Knight, LLP (“T&K”) of the fully
executed signature pages of this Settlement Agreement, the Lucas Settlement, the
VL Settlement Agreement, and the Rogers Release for all respective parties
thereto; the Reassignment; and any other documentation required to be exchanged
under this Settlement Agreement.  This Settlement Agreement shall automatically
terminate and be null and void, and of no further force or effect, if the
Payment is not timely transmitted in accordance with this Settlement Agreement.
 
5.07           LEI acknowledges that Earthstone has in good faith commenced
operations, and Earthstone shall take commercially reasonable steps to continue
such operations on or before August 31, 2015, for the drilling of either the
Boggs #1H well or the Boggs #2H well.  LEI’s sole and exclusive remedy for any
failure of Earthstone to take such further steps shall be Earthstone’s waiver of
the non-consent penalty as to the AFEs included in the May 1, 2015 letter to the
extent such waiver is required under the JOA, and LEI shall waive all other
rights and remedies for the same (including, without limitation, LEI shall not
sue Earthstone for money damages or injunctive relief for failure to continue
its operations for such wells).
 
 
COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
 
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5.08           In the event that “Recoupment”, as defined under Article VI(d) of
the JOA, occurs as to either the Boggs #1H well or the Boggs #2H well,
respectively, then within thirty (30) days thereafter Earthstone shall assign to
LEI its proportionate share of the applicable wellbore, and the Subject
Interests to the extent located within one hundred feet (100’) laterally
perpendicular to such wellbore with special warranty of title by, through and
under Earthstone, but not otherwise, effective as of the first day of the month
following the month in which such Recoupment occurs. For purposes of this
section, LEI’s “proportionate share” means an undivided 34.3971%, provided that
if as of the Effective Date Earthstone, Victory and LEI, collectively, own less
than one hundred percent (100%) of the wells, leases, and other oil and gas
properties lying within the “Contract Area” of the JOA (as defined therein), as
reflected in the real property records of Karnes County, Texas, then such
percentage shall be proportionately reduced.
 
Non-Disparagement
 
5.09           From and after the Effective Date, LEI agrees not to discuss or
comment upon, or publish any information concerning, any Earthstone Parties or
Victory Parties, their business affairs, or their management in a negative or
disparaging manner.  From and after the Effective Date, Victory agrees not to
discuss or comment upon, or publish any information concerning, any Earthstone
Parties or LEI Parties, their business affairs, or their management in a
negative or disparaging manner. From and after the Effective Date, Earthstone
agrees not to discuss or comment upon, or publish any information concerning,
any Victory Parties or LEI Parties, their business affairs, or their management
in a negative or disparaging manner.  LEI, Victory, and Earthstone each agree
not to act to disrupt, derogate, or detrimentally affect, directly or
indirectly, the business or any business relationship, services, operations,
reputation, officers, employees, financial status, or liabilities of any other
Party.
 
Release by LEI of the Earthstone Parties
 
5.10           Except as otherwise expressly set forth in the Lucas Settlement,
as of the Effective Date, LEI generally releases and forever discharges the
Earthstone Parties from any and all claims, demands, and causes of action of
whatever kind or character which LEI or any other LEI Parties have, or may have
in the future, based on any acts or omissions that have occurred on or before
the Effective Date, whether known or unknown, including claims for fraud,
fraudulent inducement, and breach of fiduciary duty (collectively, the “LEI
Claims”), save and except solely those claims, demands, and causes of action
arising out of or relating to the breach, enforcement, or interpretation of this
Settlement Agreement.
 
5.11           This release is to be construed as the broadest type of general
release and includes, but is not limited to: (a) any claim growing out of, or
connected in any way with, the Dispute; (b) any claims growing out of, or
connected in any way with, LEI’s business dealings with the Earthstone Parties;
(c) any claim based in whole or in part on the activities of the Earthstone
Parties that may have been alleged to violate any laws or administrative rules
of the United States, or any state or subdivision of the United States, or any
foreign country or subdivision of any foreign country, pertaining to inter alia,
breach of contract, fraud, negligent misrepresentation, tortious interference of
prospective contractual relations, intentional interference with an existing
contract, attorneys’ fees, breach of fiduciary duty, or punitive damages; (d)
any claim based in whole or in part on the activities of the Earthstone Parties
that may have been alleged to create any right or action for recovery for
damages or injunction, under any federal or state statutes or administrative
rule or other judicial decisions or the common law of the United States, or any
state or subdivision of the United States, or any foreign country or subdivision
of any foreign country; (e) any claim based in whole or in part on the
activities of the Earthstone Parties that may have been alleged to create or
contribute to any other right, claim or cause of action of LEI against the
Earthstone Parties; and (f) claims for punitive or exemplary damages, attorneys’
fees, or penalties.
 
5.12           This release is intended to constitute a general release by LEI
of the Earthstone Parties of the LEI Claims, whether known or unknown.  To the
extent any of the LEI Claims have not been released by this Settlement
Agreement, LEI hereby assigns those claims to Earthstone.
 
 
COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
 
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Release by Victory of the Earthstone Parties
 
5.13           As of the Effective Date, Victory generally releases and forever
discharges the Earthstone Parties from any and all claims, demands, and causes
of action of whatever kind or character which Victory or any other Victory
Parties have, or may have in the future, based on any acts or omissions that
have occurred on or before the Effective Date, whether known or unknown,
including claims for fraud, fraudulent inducement, and breach of fiduciary duty
(collectively, the “Victory Claims”), save and except solely those claims,
demands, and causes of action arising out of or relating to the breach,
enforcement, or interpretation of this Settlement Agreement.
 
5.14           This release is to be construed as the broadest type of general
release and includes, but is not limited to: (a) any claim growing out of, or
connected in any way with, the Dispute; (b) any claims growing out of, or
connected in any way with, Victory’s business dealings with the Earthstone
Parties; (c) any claim based in whole or in part on the activities of the
Earthstone Parties that may have been alleged to violate any laws or
administrative rules of the United States, or any state or subdivision of the
United States, or any foreign country or subdivision of any foreign country,
pertaining to inter alia, breach of contract, fraud, negligent
misrepresentation, tortious interference of prospective contractual relations,
intentional interference with an existing contract, attorneys’ fees, breach of
fiduciary duty, or punitive damages; (d) any claim based in whole or in part on
the activities of the Earthstone Parties that may have been alleged to create
any right or action for recovery for damages or injunction, under any federal or
state statutes or administrative rule or other judicial decisions or the common
law of the United States, or any state or subdivision of the United States, or
any foreign country or subdivision of any foreign country; (e) any claim based
in whole or in part on the activities of the Earthstone Parties that may have
been alleged to create or contribute to any other right, claim or cause of
action of Victory against the Earthstone Parties; and (f) claims for punitive or
exemplary damages, attorneys’ fees, or penalties.
 
5.15           This release is intended to constitute a general release by
Victory of the Earthstone Parties of the Victory Claims, whether known or
unknown.  To the extent any of the Victory Claims have not been released by this
Settlement Agreement, Victory hereby assigns those claims to Earthstone.
 
 
COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
 
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Release of the Earthstone Claims
 
5.16           Except as otherwise expressly set forth in the Lucas Settlement
as to Earthstone Claims against LEI, as of the Effective Date, Earthstone
generally releases and forever discharges the LEI Parties and the Victory
Parties from any and all claims, demands, and causes of action of whatever kind
or character which Earthstone or any other Earthstone Parties have, or may have
in the future, based on any acts or omissions that have occurred on or before
the Effective Date, whether known or unknown, including claims for fraud,
fraudulent inducement, and breach of fiduciary duty (collectively, the
“Earthstone Claims”), save and except solely those claims, demands, and causes
of action arising out of or relating to the breach, enforcement, or
interpretation of this Settlement Agreement.
 
5.17           This release is to be construed as the broadest type of general
release and includes, but is not limited to: (a) any claim growing out of, or
connected in any way with, the Dispute; (b) any claims growing out of, or
connected in any way with, Earthstone’s business dealings with the LEI Parties
and/or the Victory Parties; (c) any claim based in whole or in part on the
activities of the LEI Parties and/or the Victory Parties that may have been
alleged to violate any laws or administrative rules of the United States, or any
state or subdivision of the United States, or any foreign country or subdivision
of any foreign country, pertaining to inter alia, breach of contract, fraud,
negligent misrepresentation, tortious interference of prospective contractual
relations, intentional interference with an existing contract, attorneys’ fees,
breach of fiduciary duty, or punitive damages; (d) any claim based in whole or
in part on the activities of the LEI Parties and/or the Victory Parties that may
have been alleged to create any right or action for recovery for damages or
injunction, under any federal or state statutes or administrative rule or other
judicial decisions or the common law of the United States, or any state or
subdivision of the United States, or any foreign country or subdivision of any
foreign country; (e) any claim based in whole or in part on the activities of
the LEI Parties and/or the Victory Parties that may have been alleged to create
or contribute to any other right, claim or cause of action of Earthstone against
the LEI Parties and/or the Victory Parties; and (f) claims for punitive or
exemplary damages, attorneys’ fees, or penalties.
 
5.18           This release is intended to constitute a general release by
Earthstone of the LEI Parties and/or the Victory Parties of the Earthstone
Claims, whether known or unknown.  To the extent any of the Earthstone Claims
have not been released by this Settlement Agreement, Earthstone hereby assigns
those claims to LEI and/or Victory, as may be applicable.
 
5.19           Notwithstanding anything in this Settlement Agreement to the
contrary, the Earthstone Claims do not include, and Earthstone hereby reserves
and does not release or waive, and does not assign to LEI and/or Victory, any
claims, demands, and/or causes of action of whatever kind or character which
Earthstone or any other Earthstone Parties have against LEI arising from or
relating to the Lucas Settlement or the performance or enforcement thereof.
 
 
COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
 
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Indemnification
 
5.20           LEI warrants and represents that it owns the LEI Claims and that
no part of the LEI Claims has been assigned or transferred to any other person
or entity.  LEI AGREES TO FULLY INDEMNIFY AND HOLD HARMLESS EARTHSTONE FROM ANY
AND ALL CLAIMS ARISING OUT OF, OR DERIVATIVE OF, THE CLAIMS RELEASED BY LEI IN
THIS SETTLEMENT AGREEMENT, INCLUDING ALL CLAIMS FOR CONTRIBUTION AND INDEMNITY,
AND EXPRESSLY INCLUDING ANY CLAIMS ARISING OUT OF LEI’S OWN NEGLIGENCE OR
FAULT.  LEI AGREES THAT THE INDEMNIFICATION AND HOLD HARMLESS INCLUDES THE
AMOUNTS OF THE CLAIMS, THE EXPENSES OF DEFENDING AGAINST THE CLAIMS, COURT
COSTS, AND ATTORNEYS’ FEES.
 
5.21           Victory warrants and represents that it owns the Victory Claims
and that no part of the Victory Claims has been assigned or transferred to any
other person or entity.  Victory AGREES TO FULLY INDEMNIFY AND HOLD HARMLESS
EARTHSTONE FROM ANY AND ALL CLAIMS ARISING OUT OF, OR DERIVATIVE OF, THE CLAIMS
RELEASED BY VICTORY IN THIS SETTLEMENT AGREEMENT, INCLUDING ALL CLAIMS FOR
CONTRIBUTION AND INDEMNITY, AND EXPRESSLY INCLUDING ANY CLAIMS ARISING OUT OF
VICTORY’S OWN NEGLIGENCE OR FAULT.  VICTORY AGREES THAT THE INDEMNIFICATION AND
HOLD HARMLESS INCLUDES THE AMOUNTS OF THE CLAIMS, THE EXPENSES OF DEFENDING
AGAINST THE CLAIMS, COURT COSTS, AND ATTORNEYS’ FEES.
 
5.22           Earthstone warrants and represents that it owns the Earthstone
Claims and that no part of the Earthstone Claims has been assigned or
transferred to any other person or entity.  EARTHSTONE AGREES TO FULLY INDEMNIFY
AND HOLD HARMLESS LEI AND/OR VICTORY FROM ANY AND ALL CLAIMS ARISING OUT OF, OR
DERIVATIVE OF, THE CLAIMS RELEASED BY EARTHSTONE IN THIS SETTLEMENT AGREEMENT,
INCLUDING ALL CLAIMS FOR CONTRIBUTION AND INDEMNITY, AND EXPRESSLY INCLUDING ANY
CLAIMS ARISING OUT OF EARTHSTONE’S OWN NEGLIGENCE OR FAULT.  EARTHSTONE AGREES
THAT THE INDEMNIFICATION AND HOLD HARMLESS INCLUDES THE AMOUNTS OF THE CLAIMS,
THE EXPENSES OF DEFENDING AGAINST THE CLAIMS, COURT COSTS, AND ATTORNEYS’ FEES.
 
Covenant Not to Sue
 
5.23           LEI covenants and agrees not to sue Earthstone for any matters
released in Sections 5.10 and 5.11 above.
 
5.24           Victory covenants and agrees not to sue Earthstone for any
matters released in Sections 5.13 and 5.14 above.
 
5.25           Earthstone covenants and agrees not to sue LEI and/or Victory for
any matters released in Sections 5.16 and 5.17 above.
 
5.26           The parties agree that for any breach of a covenant not to sue
the breaching party shall be liable for the non-breaching party’s attorneys’
fees and costs as actual damages in a breach of contract action.
 
 
COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
 
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Cooperation and Additional Actions
 
5.27           The Parties agree to cooperate fully in executing any and all
supplementary documents, and to take all additional actions that may be
necessary or appropriate to give full force and effect to the basic terms and
intent of this Settlement Agreement.
 
Costs and Fees
 
5.28           The Parties agree that each Party shall bear its or his own costs
and attorneys’ fees incurred in connection with the Dispute and the negotiation,
drafting, and execution of this Settlement Agreement.
 
Choice of Law
 
5.29           This Settlement Agreement shall be governed by, construed,
interpreted, and enforced in accordance with the laws of the State of Texas,
except that any conflict of law rule of that jurisdiction that may require
reference to the laws of some other jurisdiction shall be disregarded.
 
Confidentiality
 
5.30           From the Effective Date forward, the Parties agree not to reveal
the terms of this Settlement Agreement to anyone who is not a Party to this
Settlement Agreement.  However, the Parties agree that this section shall not
prevent any Party from revealing or discussing the terms of this Settlement
Agreement (a) with its or his legal advisors, accountants, tax advisors, or
financial advisors; (b) in any action regarding the breach, enforcement, or
interpretation of this Settlement Agreement; and (c) as required by law
(including, where applicable, the Securities and Exchange Commission filing
obligations of the Parties), contract, governmental agency, or any court of
competent jurisdiction.
 
Miscellaneous
 
5.31           The Parties agree that this Settlement Agreement is entered into
for settlement purposes only in order to avoid further trouble, litigation, and
expense, and it is further agreed that no Party admits any liability or damages
as a result of the acts and omissions that form the basis of the Dispute.
 
5.32           This Settlement Agreement has been prepared by the joint efforts
of the respective attorneys for each of the Parties.
 
5.33           Section numbers and section titles have been set forth herein for
convenience only; they shall not be construed to limit or extend the meaning or
interpretation of any part of this Settlement Agreement.
 
5.34           With the exception of Sections 5.10, 5.13 and 5.16, if any
provision of this Settlement Agreement is or may be held by a court of competent
jurisdiction to be invalid, void, or unenforceable, the remaining provisions
shall nevertheless survive and continue in full force and effect without being
impaired or invalidated in any way.
 
 
COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
 
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5.35           None of the Parties to this Settlement Agreement has expressed
any facts, representations, or express or implied warranties to the other Party,
except as expressly contained in this Settlement Agreement.
 
5.36           This Settlement Agreement shall continue perpetually and shall be
binding upon the Parties and their heirs, successors, and assigns and shall
inure to the benefit of the Parties and their heirs, successors, and assigns.
 
5.37           Except, as between Earthstone and LEI, as expressly set forth in
the Lucas Settlement, and as between Victory and LEI as expressly set forth in
the VL Settlement Agreement or the Rogers Release, this Settlement Agreement
represents the entire agreement of the Parties and supersedes all prior written
or oral agreements, and the terms are contractual and not mere recitals.
 
5.38           This Settlement agreement may not be amended, altered, modified
or changed in any way except in writing signed by all the Parties to this
Settlement Agreement.
 
5.39           EACH PARTY WARRANTS THAT IT HAS CAREFULLY READ THIS AGREEMENT
(INCLUDING THIS DISCLAIMER OF RELIANCE SET FORTH HEREIN IN WHAT EACH PARTY
AGREES TO BE APPROPRIATELY CONSPICUOUS LANGUAGE) AND ANY EXHIBITS ATTACHED TO
THIS AGREEMENT, EACH PARTY REPRESENTS AND WARRANTS THAT IT UNDERSTANDS THIS
AGREEMENT AND DISCLAIMER’S CONTENTS, AND SIGNS THIS AGREEMENT AS ITS OR HIS OWN
FREE ACT.  EACH PARTY  EXPRESSLY WARRANTS THAT NO PROMISE OR AGREEMENT WHICH IS
NOT HEREIN EXPRESSED HAS BEEN MADE TO IT OR HIM IN EXECUTING THIS AGREEMENT, AND
THAT EACH PARTY IS NOT RELYING UPON (INDEED, EXPRESSLY DISCLAIMS RELIANCE UPON)
ANY STATEMENT OR REPRESENTATION OF ANY PARTY OR ANY AGENT OF ANY OF THE PARTIES
HERETO.  EACH PARTY AGREES THIS IS AN ARM’S-LENGTH TRANSACTION (NO FIDUCIARY
RELATIONSHIP EXISTS) AND EACH PARTY REPRESENTS, WARRANTS, AND PROMISES THAT IT
OR HE IS RELYING SOLELY ON ITS OR HIS OWN JUDGMENT AND DUE DILIGENCE, WHICH IT
OR HE HEREBY CONTRACTUALLY AGREES TO UNDERTAKE.  EACH PARTY WARRANTS IT OR HE
HAS BEEN REPRESENTED BY LEGAL COUNSEL IN THIS MATTER.  EACH PARTY REPRESENTS
THAT ITS OR HIS LEGAL COUNSEL HAS READ AND EXPLAINED TO THAT PARTY THE ENTIRE
CONTENTS OF THIS AGREEMENT IN FULL, AS WELL AS THE LEGAL CONSEQUENCES OF THIS
AGREEMENT AND DISCLAIMER.  EACH PARTY AGREES AND WARRANTS THAT IT OR HE HAS READ
THE ENTIRE CONTENTS OF THIS AGREEMENT IN FULL, IS SOPHISTICATED AND
KNOWLEDGEABLE ABOUT BUSINESS, AND FULLY UNDERSTANDS THE LEGAL CONSEQUENCES OF
THIS AGREEMENT AND DISCLAIMER.  EACH PARTY REPRESENTS, WARRANTS, AND PROMISES
THAT THIS SECTION IS A CLEAR, UNEQUIVOCAL, AND EFFECTIVE DISCLAIMER OF RELIANCE
UNDER TEXAS LAW AND THAT THIS AGREEMENT AND DISCLAIMER IS INTENDED TO AND DOES
NEGATE ANY CLAIM FOR FRAUD OR FRAUDULENT INDUCEMENT INTO THIS AGREEMENT.
 
[The remainder of this page has been intentionally left blank]
 
 
 
COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
 
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5.40            This Settlement Agreement may be executed in multiple
counterparts or copies and/or on separated signature pages and/or by e-mail
transmission, any or all of which when taken together shall be deemed an
original for all purposes.
 

 
EARTHSTONE OPERATING, LLC (formerly Oak Valley Operating, LLC)

By:   ___________________________________
Name, Title: ________________________, ________

Date: ________________

EARTHSTONE ENERGY, INC.

By:   ___________________________________
Name, Title: ________________________, ________

Date: ________________

OAK VALLEY RESOURCES, LLC

By:   ___________________________________
Name, Title: ________________________, ________

Date: ________________

SABINE RIVER ENERGY, LLC

By:   ___________________________________
Name, Title: ________________________, ________

Date: ________________
 
 
 
COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
 
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LUCAS ENERGY INC.

By:   ___________________________________
Name, Title: ________________________, ________

Date: ________________

VICTORY ENERGY CORPORATION

By:   ___________________________________
Name, Title: ________________________, ________

Date: ________________

AEP ASSETS, LLC

By:   ___________________________________
Name, Title: ________________________, ________

Date: ________________

AURORA ENERGY PARTNERS
 

 
By ______________________________
Its General Partner

By:   ___________________________________
Name, Title: ________________________, ________

Date: ________________
 
 
COMPROMISE SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
 
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EXHIBIT A
Form of Reassignment

[ attached ]

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
EXHIBIT A - PAGE 1

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NOTICE OF CONFIDENTIALITY RIGHTS:  IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE
OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT
TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE
PUBLIC RECORDS:  YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.

 
ASSIGNMENT AND BILL OF SALE
 

 
STATE OF TEXAS  
                                                                                                                                                                              
KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF KARNES

THAT, VICTORY ENERGY CORPORATION, a Texas corporation, whose mailing address is
3355 Bee Caves Road, Suite 608, Austin, Texas 78746 (hereinafter referred to as
“Assignor”), for sufficient consideration received from SABINE RIVER ENERGY,
LLC, a Texas limited liability company, whose mailing address is 1400 Woodloch
Forest Drive, Suite 300, The Woodlands, Texas 77380-1197 (hereinafter referred
to as “Assignee”), does hereby transfer, assign, sell, bargain and convey unto
Assignee, subject as herein provided, all of Assignor’s right, title and
interest in and to the Oil and Gas Leases described on Exhibit “A” attached
hereto and made a part hereof (said leases being hereinafter referred to as
“Leases”).

It is the intent of this Assignment and Bill of Sale that Assignor shall retain
no interest of any kind or character in the Leases described on Exhibit “A”
attached hereto and made a part hereof.

To have and to hold the Leases and interest forever, subject to the following:

1.  This Assignment and Bill of Sale is subject to the terms and provisions of
the Leases and Assignee hereby assumes its proportionate share of all express
and implied covenants thereunder.
 

2.  This Assignment and Bill of Sale shall be binding upon and inure to the
benefit of Assignee and Assignor and their respective successors, heirs and
assigns.
 

3.      This Assignment and Bill of Sale is subject to all of the terms and
provisions contained in the unrecorded Participation Agreement dated effective
August 1, 2014.  It is agreed between the Parties that should there arise any
conflict between the terms of this Assignment and Bill of Sale and said
Participation Agreement, the terms and provisions of the Participation Agreement
shall control.

4.      This Assignment and Bill of Sale is further made subject to all of the
terms and provisions contained in that certain unrecorded Compromise Settlement
Agreement and General Release executed by and among the Assignor, the Assignee,
Lucas Energy, Inc., and certain affiliated parties, dated June ___ , 2015 (the
“Settlement Agreement”).  Notwithstanding anything contained herein to the
contrary, in the event of conflict between the terms of this Assignment and Bill
of Sale, the Participation Agreement referenced in Section 3 above, and the
Settlement Agreement, the terms of the Settlement Agreement shall control.

 
EXHIBIT A - PAGE 2

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5.      This Assignment and Bill of Sale may be executed in any number of
counterparts, and each counterpart may be recorded separately or may be combined
to form one (1) instrument for recording purposes.

[Signature Page to Follow]

 
EXHIBIT A - PAGE 3

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Executed by Assignor and Assignee on the dates reflected in their respective
acknowledgments, but effective as of February 27, 2015.

 

   
ASSIGNOR

VICTORY ENERGY CORPORATION

By:________________________________

Printed Name:_______________________

Title:______________________________
 
 
 
ASSIGNEE

SABINE RIVER ENERGY, LLC

By:_________________________________
Christopher E. Cottrell
Executive Vice President Land & Marketing
               

 

 
EXHIBIT A - PAGE 4

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ACKNOWLEDGMENTS
 

STATE OF TEXAS

COUNTY OF TRAVIS

This instrument was acknowledged before me on this _____ day of
_________________, 2015 by ___________________________, who is _____________ of
VICTORY ENERGY CORPORATION, a Texas corporation, on behalf of said corporation.

My Commission
Expires:_____________                 ____________________________________
Notary Public for the State of Texas
County of Travis
Printed Name:________________________

STATE OF TEXAS

COUNTY OF MONTGOMERY

This instrument was acknowledged before me on this _____ day of _______________,
2015 by Christopher E. Cottrell, who is Executive Vice President Land &
Marketing of SABINE RIVER ENERGY, LLC, a Texas limited liability company, on
behalf of said limited liability company.

My Commission
Expires:___________                      ____________________________________
Notary Public for the State of Texas
County of Montgomery
Printed Name:________________________

EXHIBIT “A”

 
EXHIBIT A - PAGE 5

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Attached hereto and made to that certain Assignment and Bill of Sale dated
effective February 27, 2015 by and between Victory Energy Corporation, as
Assignor, and Sabine River Energy, LLC, as Assignee.

OIL AND GAS LEASES:

Lessor:
Leland Copeland
Lessee:
Lucas Energy, Inc.
Effective Date:
July 16, 2013
Memorandum Recorded:
Volume 1134, Page 651
Description:
143.00 acres more or less, out of the Thomas P. Crosby Survey,
 
Abstract 66, Karnes County, Texas
   
Lessor:
Glenn D. Boggs, Jr. and Wife, Betty J. Boggs
Lessee:
Lucas Energy, Inc.
Effective Date:
July 16, 2013
Memorandum Recorded:
Volume 1134, Page 653
Description:
143.00 acres more or less, out of the Thomas P. Crosby Survey,
 
Abstract 66, Karnes County, Texas
   
Lessor:
Red Crest Trust, JPMorgan Chase Bank, N. A. as Trustee
Lessee:
Billy R. Wilson
Effective Date:
March 25, 2008
Recorded:
Volume 873, Page 394
Description:
250.00 acres more or less, out of the Thomas P. Crosby Survey,
 
Abstract 66, Karnes County, Texas

IN ADDITION TO ANY AND ALL INTEREST ASSIGNOR HAS IN THE ABOVE DESCRIBED LEASES,
ASSIGNOR IS CONVEYING TO ASSIGNEE ALL OF ITS RIGHT, TITLE AND INTEREST THAT
ASSIGNOR WAS ASSIGNED IN THAT CERTAIN PARTIAL ASSIGNMENT AND BILL OF SALE OF
WELLBORE RIGHTS BY AND BETWEEN LUCAS ENERGY, INC., AS ASSIGNOR, AND VICTORY
ENERGY CORPORATION, AS ASSIGNEE, DATED EFFECTIVE FEBRUARY 27, 2015, RECORDED IN
VOLUME 1223, PAGE 133, DOCUMENT NO. 00141110 IN THE OFFICIAL RECORDS OF KARNES
COUNTY, TEXAS.

All recording references are as to Karnes County, Texas.

END OF EXHIBIT “A”

 
 
 
 
EXHIBIT A - PAGE 6

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EXHIBIT D

Form of Proxy

PROXY

The undersigned, Victory Energy Corporation, having an address at 3355 Bee Caves
Road, Suite 608, Austin, Texas 78746, being the holder of 1,517,241 shares of
Lucas Energy, Inc. (or such lesser number of shares of Lucas Energy, Inc. that
Victory continues to hold after the date hereof), does hereby constitute and
appoint the Board of Directors of Lucas Energy, Inc. acting through its
authorized officer, including its Chief Executive Officer, as the undersigned’s
proxy to act by written consent of the stockholders of Lucas Energy, Inc. during
the period from the date hereof through the second anniversary of the date
hereof and to attend all the meetings of the stockholders of said corporation to
be held between the date hereof and the second anniversary of the date hereof or
any continuation or adjournment thereof, with full power to vote and act for
undersigned and in the undersigned’s name, place and stead, in the same manner,
to the same extent and with the same effect that the undersigned might were the
undersigned personally present thereat, giving to said Board of Directors of
Lucas Energy, Inc. full power of substitution and revocation, and the
undersigned hereby revokes any other proxy heretofore given by the
undersigned.  This proxy is coupled with an interest and is irrevocable during
the period from the date hereof through the second anniversary of the date
hereof.

Dated _____, 2015.

 

   
Victory Energy Corporation

By:                                                                           
Kenneth Hill, Chief Executive Officer
               

 
 
 
 
 
 
 
 
 

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