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|   |         a.              **"Proceeds"** means the sum of (a) the proceeds realized from the sale      of production from all Wells, after excluding the Existing Burdens attributable      thereto, (b) any sales proceeds realized from the sale or other disposition      of part, or all, of an interest in the Wells, or the Subject Leases, (c)      any insurance proceeds received in respect of loss or damage to Wells, or      the Subject Leases, and (d) proceeds received in respect of damages pursuant      to any settlement or judgment in legal proceedings affecting the Wells,      Subject Leases or operations thereon.               b.              **"Exploration and Development Costs"** of the Wells means all actual      third party direct costs and expenses incurred or paid with respect thereto,      including but not limited to (a) costs of drilling, re-entering, logging,      testing, completing, and equipping |
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|   | such Well(s) for production, (b) that portion      of drilling rate overhead charges allocated to such Well(s) under the applicable      JOA, and (c) costs of plugging and abandoning and surface restoration for      any such well completed as a dryhole.               c.              **"Operating Costs"**of a Well means all costs incurred in producing      such Well and disposing of such production including, but not limited to: |
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|   |            (i)               Labor and other services      necessary for the maintenance and operations of such Well;                  (ii)              Materials, supplies, transportation, repairs, and replacements used in the      maintenance and operation of such Well, including replacements for all parts      of machinery, equipment, tanks, or other equipment to replace and/or repair      original Well and/or lease equipment;                 (iii)        Reworking      or re-equipping such Well;                 (iv)       Gathering,      treating, processing, transporting, and marketing of production from such      Well; and ad valorem, severance, gathering, windfall profits, or other applicable      taxes; and                 (v)        That      portion allocated to such Well in accordance with the usual and customary      accounting practices of all other costs (including, but not limited to,      overhead costs of the Contract Operator as set out in the JOA) which, pursuant      to such accounting practices, are determined to be Operating Costs. |
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|   |         d.      **"Acquisition Costs"** means the sum of all costs incurred and paid      that are associated with acquiring Subject Leases, including land brokerage,      title and curative costs, and all delay rentals paid.               e. **"Seismic Costs"**means      all costs incurred and paid in connection with the Exploration Program,      including without limitation costs of acquiring seismic permits, options      and licenses attributable to the Area. |
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|   |         a.              **ZaZa Bears Economic Risk**.      ZaZa has substantial experience in evaluating and investing in private transactions      of securities in companies similar to the ReoStar so that it is capable      of evaluating the merits and risks of its investment in ReoStar and has      the capacity to protect its own interests. ZaZa must bear the economic risk      of this investment indefinitely unless the Shares are registered pursuant      to the Securities Act, or an exemption from registration is available. ZaZa      also understands that there is no assurance that any exemption from registration      under the Securities Act will be available and that, even if available,      such exemption may not allow ZaZa to transfer all or any       portion of the Shares under the circumstances in the amounts or at the times      ZaZa might propose. |
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|   |         b.              **Acquisition for own Account**.      ZaZa is acquiring the Shares for ZaZa's own account for investment only,      and not with a view towards their distribution within the meaning of the      Securities Act.               c.         **ZaZa      Can Protect Its Interest**. ZaZa represents that by reason of ZaZa's business      or financial experience, ZaZa has the capacity to protect ZaZa's own interests      in connection with the transactions contemplated in this Agreement.               d.         **ReoStar      Information**. ZaZa has had an opportunity to discuss the ReoStar's business,      management and financial affairs with directors, officers and management      of ReoStar and have had the opportunity to review the ReoStar's operations      and facilities. ZaZa has also had the opportunity to ask questions of and      receive answers from ReoStar and its management regarding the terms of this      transaction.               e.         **Rule      144**. ZaZa acknowledges and agrees that the Shares must be held indefinitely      unless they are subsequently registered under the Securities Act or an exemption      from such registration is available. ZaZa has been advised or is aware of      the provisions of Rule 144 promulgated under the Securities Act as in effect      from time to time, which permits limited resale of shares purchased in a      private transaction subject to the satisfaction of certain conditions, including,      among other things: the availability of certain current public information      about ReoStar (which ReoStar has agreed to properly prepare and file from      time to time as required for at least the four (4) year period following      the date of this Agreement), the resale occurring following the required      holding period under Rule 144 promulgated under the Securities Act and the      number of shares being sold during any three-month period not exceeding      specified limitations. |
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