Filed by sedaredgar.com - Doral Energy Corp. - Exhibit 10.8






THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE “ACT”), AND ARE BEING OFFERED AND SOLD IN
RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT. SUCH
SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED
UNLESS THEY ARE REGISTERED UNDER THE APPLICABLE PROVISIONS OF THE ACT OR ARE
EXEMPT FROM SUCH REGISTRATION. THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”)
OR BY ANY STATE SECURITIES ADMINISTRATION OR REGULATORY AUTHORITY. 

CONVERSION AGREEMENT 

          THIS
CONVERSION AGREEMENT (this “Agreement”) is entered into by and between,
MACQUARIE INVESTMENTS, LLC a Delaware limited liability company (together with
its successors and assigns, “MAC”) and DORAL ENERGY CORP., a Nevada
corporation (together with its successors and assigns, the “Company”).
MAC and the Company may be referred to herein individually as a “Party”
or collectively as the “Parties”). 

RECITALS 

          A.     
Macquarie Bank Limited (“MBL”) and the Company entered into a Senior
First Lien Secured Credit Agreement, dated July 29, 2008, (as the same may be
amended, modified or restated from time to time, the “Credit Agreement”).


          B.     
In connection with the Credit Agreement, the Company assigned to MAC a NPORRI
(defined below) in certain properties owned by the Company. 

          C.      MAC
and the Company have agreed that the NPORRI may be converted to common stock of
the Company upon the terms and conditions set forth in this Agreement. 

          NOW,
THEREFORE, in consideration of the mutual covenants and Agreements contained
herein, MAC and the Company do hereby agree as follows: 

ARTICLE I 
DEFINITIONS 

          1.1     
Definitions. As used herein, the following terms shall have the meanings
set forth below:

          “Acceptable
Investment Banks” means the investment banks identified on Schedule
I. 

          “Agreement”
shall have the meaning set forth in the introductory paragraph hereof and any
amendments, modifications or supplements hereto. 




          “Agreement
Shares” means the Common Shares into which the NPORRI may be converted
pursuant to this Agreement. 

          “Applicable
Percentage” shall have the meaning set forth in the NPORRI Conveyance. 

          “Approved
Exchange” means the American Stock Exchange or such other exchange as
approved by MAC in its discretion. 

          “Commission”
means the U.S. Securities and Exchange Commission or any other United States
Federal agency administering the Securities Act and/or the Exchange Act at the
time. 

          “Common
  Shares” means and includes the shares of common stock of the Company,
  par value $0.001 per share, or any such other securities (equity or debt)
  into which or for which such shares are converted, substituted or exchanged.

          “Company”
shall have the meaning set forth in the introduction hereto. 

          “Conversion”
means the conversion of the NPORRI into Common Shares of the Company pursuant to
the terms of this Agreement. 

          “Conversion
Conditions” means the following items or events: 

	 	(a) 	
      the Common Shares are listed on an Approved
    Exchange;

	 	 	 
	 	(b) 	
      not more than sixty-five percent (65%) of the issued and
      outstanding Common Shares are held by (i) direct or indirect beneficial
      owners (as defined in Rule 13d-3 of the Exchange Act) of more than ten
      percent (10%) of any Common Stock or any Convertible Securities of the
      Company, (ii) any officer (as defined in Rule 16a-1(f) of the Exchange
      Act) of the Company or (iii) any member of the Company’s board of
      directors; and

	 	 	 
	 	(c) 	
      the average trading volume of the Common Shares traded on
      an Approved Exchange over the sixty (60) trading days immediately prior to
      the Conversion Notice Date is equal to or greater than fifty percent (50%)
      of the Common Shares which are eligible to be traded on an Approved
      Exchange.



          “Conversion
Condition Date” means the first date on which all of the Conversion
Conditions have been satisfied. 

          “Conversion
Notice” shall have the meaning set forth in Section 2.1. 

          “Conversion
Notice Date” means the date of a Conversion Notice. 

          “Conversion
Rights” means the right to initiate a Conversion as set forth in Section
2.1. 

2 




          “Convertible
Securities” means debt instruments, units, interests or other securities
which are convertible into or exercisable or exchangeable for, with or without
payment of additional consideration in cash or property into, Common Shares,
either immediately or upon a specified date or the happening of a specified
event. 

          “Credit
Agreement” shall have the meaning set forth in the introductory paragraph
hereof. 

          “Exchange
Act” means the Securities Exchange Act of 1934, as amended, or any successor
Federal statute, and the rules and regulations of the Commission promulgated
thereunder, all as the same shall be in effect from time to time. 

          “GAAP”
means generally accepted accounting principles recognized as such by the
Financial Accounting Standards Board (or generally recognized successor)
consistently applied and maintained throughout the period indicated and
consistent with applicable laws, except for changes mandated by the Financial
Accounting Standards Board or any similar accounting authority of comparable
standing. If any change in any accounting principle or practice is required by
the Financial Accounting Standards Board (or generally recognized successor) in
order for such principle or practice to continue as a generally accepted
principle or practice, all financial reports or statements required hereunder or
in connection herewith may be prepared in connection with such change, but all
calculations and determinations to be made hereunder may be made in accordance
with such change only if Borrower and the Administrative Agent agree to do so.
Whenever any accounting term is used herein which is not otherwise defined, it
shall be interpreted in accordance with GAAP. 

          “MAC”
shall have the meaning set forth in the preamble hereto. 

          “NPORRI”
means the Net Profits Overriding Royalty Interest conveyed to MAC by the Company
pursuant to that certain Net Profits Overriding Royalty Interest Conveyance
dated July ___, 2008 as the same may be amended, modified or supplemented from
time to time. 

          “NPORRI
Conveyance” means the conveyance or conveyances creating the NPORRI. 

          “NPORRI
Value” shall have the meaning set forth in Section 2.1(b). 

          “Person”
means an individual, corporation, partnership, limited liability company, joint
venture, trust or unincorporated organization, joint stock company or other
similar organization, Governmental Authority or any other legal entity, whether
acting in an individual, fiduciary or other capacity. 

          “Registrable
Securities” means (a) the Agreement Shares (whether or not the related
Conversion has been exercised) and (b) any other securities issued or issuable
with respect to this Agreement by way of stock dividends or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise. As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable Securities
when (i) they are sold pursuant to an effective Registration Statement under the
Securities Act, (ii) they 

3 




are sold pursuant to Rule 144 (or any similar provision then in
force under the Securities Act) and the transferee thereof does not receive
“restricted securities” as defined in Rule 144, (iii) they have been sold in a
private transaction in which the transferor’s rights under this Agreement are
not assigned to the transferee of the securities in accordance with Section
3.1 of this Agreement, or (iv) they become eligible for resale pursuant to
Rule 144 (or any similar rule then in effect) and MAC does not then beneficially
own more than one percent (1%) of such class of securities and MAC may sell all
of such securities within a ninety (90) day period. No Registrable Securities
may be registered under more than one Registration Statement at any one time.


          “Sales
Price” means, on the relevant date, the closing sale price per share, or if
no closing sale price is reported, the average bid and asked prices or, if more
than one, in either case, the average of the average bid and average asked
prices, on such date as reported in transactions for the Approved Exchange, in
each case without reference to after-hours or extended market trading. 

          “Securities
Act” means the United States Securities Act of 1933, as amended, or any
successor United States Federal statute, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect from time
to time. 

          “Subject
Interests” means the properties of the Company subject to and burdened by
the NPORRI. 

          “VWAP”
means, as of any date of determination, the volume weighted average of the Sales
Price of the Common Shares for the applicable period, appropriately adjusted to
take into account the occurrence, during the applicable period, of any action of
event described in Section 2.7. 

          Other
capitalized terms used in this Agreement but not otherwise defined herein shall
have the meanings set forth in the NPORRI Conveyance. 

          1.2     
Accounting Terms and Determinations. Except as otherwise expressly
provided herein, all accounting terms used herein shall be interpreted, and all
financial statements and certificates and reports as to financial matters
required to be delivered to MAC hereunder shall be prepared, in accordance with
GAAP. All calculations made for the purposes of determining compliance with the
terms of this Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP. 

          1.3     
Rules of Construction. The title of and the section and paragraph
headings in this Agreement are for convenience of reference only and shall not
govern or affect the interpretation of any of the terms or provisions of this
Agreement. The use herein of the masculine, feminine or neuter forms shall also
denote the other forms, as in each case the context may require. Where specific
language is used to clarify by example a general statement contained herein,
such specific language shall not be deemed to modify, limit or restrict in any
manner the construction of the general statement to which it relates. The
language used in this Agreement has been chosen by the parties to express their
mutual intent, and no rule of strict construction shall be applied against any
party. In the case of this Agreement, (a) the meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms; (b)
Annex, Exhibit, Schedule and Section references 

4 




are to this Agreement unless otherwise specified; (c) the term
“including” is not limiting and means “including but not limited to;” (d) in the
computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including” the words “to” and “until” each mean
“to but excluding,” and the word “through” means “to and including;” (e) unless
otherwise expressly provided in this Agreement, (i) references to
agreements and other contractual instruments shall be deemed to include all
subsequent amendments and other modifications thereto, but only to the extent
such amendments and other modifications are not prohibited by the terms of the
Agreement, and (ii) references to any statute or regulation shall be
construed as including all statutory and regulatory provisions amending,
replacing, supplementing or interpreting such statute or regulation; (f) this
Agreement may use several different limitations, tests or measurements to
regulate the same or similar matters, all of which are cumulative and each shall
be performed in accordance with its terms; and (g) this Agreement is the result
of negotiations among and have been reviewed by counsel to the Company and the
other parties thereto and are the products of all parties; accordingly, they
shall not be construed against MAC merely because of MAC’s involvement in their
preparation. 

ARTICLE II 
CONVERSION 

          2.1      Conversion.

                         (a)     
Upon all of the Conversion Conditions having been satisfied, either Party shall,
for a period of ten (10) years after the Conversion Condition Date, have the
right to initiate a Conversion by providing written notice thereof to the other
Party. A Conversion may not be a partial conversion. A Conversion Notice, once
delivered, shall be irrevocable. Notwithstanding the forgoing, if a Conversion
Condition Date shall not have occurred within ten (10) years after the date of
this Agreement as set out below, the Conversion Rights shall expire and shall
not be exercisable by either Party. 

                         (b)      Upon
receipt of the Conversion Notice by the receiving Party, the Parties shall
select three Acceptable Investment Banks to value the NPORRI. Such valuation
shall be accomplished by multiplying the Applicable Percentage by the average of
the fair market values of the Subject Interests (as determined as the Conversion
Notice Date by each of the selected Acceptable Investment Banks) less
indebtedness owed to MBL by the Company (the “NPORRI Value”). The
Parties will utilize commercially reasonable efforts to complete this valuation
process within ninety (90) days following the Conversion Notice. MAC shall bear
all costs relating to the determination of the NPORRI Value. 

                         (c)     
Within five (5) days after the determination of the NPORRI Value, MAC shall
deliver a Termination and Reassignment of the NPORRI in substantially the form
as attached hereto as Exhibit A to the Company. 

                         (d)     
Contemporaneously with the delivery of the Termination and Reassignment, the
Company shall issue and deliver, or cause to be issued and delivered, to MAC a
certificate or certificates for the full number of Common Shares calculated
pursuant to Section 2.2. As permitted 5 




by applicable law, any Person in whose name the certificates
for Common Shares are to be issued shall be deemed to have become a shareholder
of record of such Common Shares effective as of the Conversion Notice Date and
shall be entitled to all of the benefits of such shareholder on the Conversion
Notice Date, including the right to receive dividends and other distributions
for which the record date falls on or after the Conversion Notice Date and to
exercise voting rights. 

          2.2     
  Agreement Shares. Upon satisfaction of the conditions set forth in Section
  2.1, the number of shares that the Company shall deliver to MAC shall be
  determined by dividing the NPORRI Value by the VWAP for the sixty (60) trading
  days preceding the Conversion Notice Date.

          2.3      Expenses
and Taxes. The Company shall pay all expenses and taxes (including all
documentary, stamp, transfer or other transactional taxes) attributable to the
preparation, issuance or delivery of this Agreement and of the Common Shares
issuable upon exercise of this Agreement, other than income taxes. 

          2.4     
Reservation of Common Shares. So long as the Conversion Rights remain
unexercised, the Company shall reserve, free from preemptive or similar rights,
out of its authorized but unissued Common Shares, and solely for the purpose of
effecting the exercise of this Agreement, a sufficient number of Common Shares
to provide for the exercise of this Agreement. 

          2.5      Valid
Issuance. All Common Shares issued upon exercise of the Conversion Rights
will, upon delivery of the Termination and Reassignment and issuance by the
Company, be duly authorized, validly and legally issued, fully paid and
nonassessable and free and clear of all taxes, liens, security interests,
charges and other encumbrances or restrictions with respect to the issuance
thereof and, without limiting the generality of the foregoing, the Company shall
take all actions necessary to ensure such result and shall not take any action
which will cause a contrary result. 

          2.6     
Acknowledgment of Rights. At the time of the exercise of the Conversion
Rights in accordance with the terms hereof and upon the written request of MAC,
the Company will acknowledge in writing its continuing obligation to afford to
MAC any rights to which MAC shall continue to be entitled after such exercise in
accordance with the provisions of this Agreement; provided, however, that if MAC
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to MAC any such rights. 

          2.7     
Adjustment of Number of Shares. To prevent dilution of the rights granted
under this Agreement after the Conversion Notice Date, the Sales Price and the
number of Common Shares issuable upon the proper exercise of the Conversion
Rights are subject to adjustment from time to time as follows: 

                         (a)     
Conversion or Redemption of Common Shares. Should all of the Common
Shares be redeemed, exchanged, substituted or converted into shares or any other
security of the Company (the “Exchanged Securities”), then the Conversion
Rights shall become immediately exercisable for that number of the Exchanged
Securities equal to the number of Exchanged Securities that would have been
received if the Conversion Rights had been exercised in full 

6 




immediately prior to such redemption, exchange, substitution or
conversion, and the Common Shares received thereupon had been subsequently
redeemed, exchanged, substituted, or converted upon the occurrence of such
event, and the Sales Price shall immediately be adjusted to equal the quotient
obtained by dividing (i) the aggregate Sales Price of the maximum number
of shares of Common Shares for which this Agreement was exercisable immediately
prior to such conversion, exchange, substitution or redemption, by (ii)
the number of Exchange Securities for which this Agreement is exercisable
immediately after such conversion, exchange, substitution or redemption. 

                         (b)     
Offer. If there shall be an offer for all of the Common Shares, whether
in the form of cash, securities or otherwise, then, as a part of such offer,
lawful provision shall be made so that MAC shall thereafter be entitled to
receive upon exercise of the Conversion Rights contained in this Agreement, the
number of shares or other securities of the offeror that a shareholder of the
Common Shares issuable upon Conversion would have been entitled to receive in
such offer if this Agreement had been exercised immediately before such offer,
all subject to further adjustment as provided in this Section 2.7. The
foregoing provisions of this Section 2.7(b) shall similarly apply to
successive offers and to the shares that are at the time receivable upon the
exercise of this Agreement. If the per-share consideration payable to MAC for
shares in connection with any such offer is in a form other than cash or
marketable securities, then the value of such consideration shall be determined
in good faith by the Company’s Board of Directors. In all events, appropriate
adjustment (as determined in good faith by the Company’s Board of Directors)
shall be made in the application of the provisions of this Agreement with
respect to the rights and interests of MAC after the transaction, to the end
that the provisions of this Agreement shall be applicable after that event, as
near as reasonably may be, in relation to any shares or other property
deliverable after that event upon Conversion. 

                         (c)      Reclassification.
If the Company shall change any of the securities as to which purchase rights
under this Agreement exist into the same or a different number of securities of
any other class or classes, this Agreement shall thereafter represent the right
to acquire such number and kind of securities as would have been issuable as the
result of such change with respect to the securities that were subject to the
purchase rights under this Agreement immediately prior to such reclassification
or other change and the Sales Price therefor shall be appropriately adjusted,
all subject to further adjustment as provided in this Section 2.7. No
adjustment shall be made pursuant to this Section 2.7(c), upon any
conversion, exchange, substitution or redemption of the Common Shares that is
the subject of Section 2.7(a). 

                         (d)     
Split, Subdivision or Combination of Shares. If the Company shall split,
subdivide or consolidate the securities as to which purchase rights under this
Agreement exist, into a different number of securities of the same class, the
Sales Price for such securities shall be proportionately decreased in the case
of a split or subdivision or proportionately increased in the case of a
combination. 

                         (e)      Adjustments
for Dividends in Shares or Other Securities or Property. If the Person to
which Conversion Rights are vested at the time shall have received, or, on or
after the record date fixed for the determination of eligible shareholders,
shall have become entitled to 

7 




receive, without payment therefor, other or additional shares
or other securities or property (other than cash) of the Company by way of
dividend, then and in each case, this Agreement shall represent the right to
convert, in addition to the number of shares of the security receivable upon
exercise of this Agreement, and without payment of any additional consideration
therefor, the amount of such other or additional shares or other securities or
property (other than cash) of the Company that such Person would hold on the
date of such exercise had it been the Person of record of the security
receivable upon Conversion on the date hereof and had thereafter, during the
period from the date hereof to and including the date of such Conversion,
retained such shares and/or all other additional shares available by it as
aforesaid during such period, giving effect to all adjustments called for during
such period by the provisions of this Section 2.7. 

                         (f)      Other
Dilutive Events. In case any event shall occur as to which the provisions of
this Section 2.7 are not strictly applicable, but the failure to make any
adjustment would not fairly protect the Conversion Rights presented by this
Agreement in accordance with the essential intent and principles of this
Section 2.7, then, in each such case, the Company shall make a good faith
adjustment to the number of Common Shares to which MAC is entitled upon the
proper exercise of the Conversion Rights in accordance with the intent of this
Section 2.7 and, upon the written request of MAC, shall appoint an
independent financial expert, which shall give their opinion upon the
adjustment, if any, on a basis consistent with the essential intent and
principles of this Section 2.7. 

                         (g)      Certificate
as to Adjustments. Upon the occurrence of each adjustment or readjustment
pursuant to this Section 2.7, the Company at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
furnish to MAC a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Company shall, upon the written request, at any time, of MAC, furnish or
cause to be furnished to MAC a like certificate setting forth: (i) such
adjustments and readjustments, and (ii) the number of shares and the amount, if
any, of other property that at the time would be received upon the exercise of
any Conversion Rights under this Agreement. 

                         (h)     
  No Impairment. The Company will not, by any voluntary action, avoid or
  seek to avoid the observance or performance of any of the terms to be observed
  or performed hereunder by the Company, but will at all times in good faith assist
  in the carrying out of all the provisions of this Section 2.7 and in
  the taking of all such action as may be necessary or appropriate in order to
  protect the rights of MAC under this Agreement against impairment.

          2.8      No
Fractional Common Shares. The Company shall not be required to issue any
fractional Common Share on the exercise of this Agreement. The number of full
Common Shares which shall be issuable upon such exercise shall be computed on
the basis of the aggregate number of whole Common Shares deliverable upon
Conversion. If any fraction of a Common Share would, except for the provisions
of this Section 2.8, be issuable on the exercise of this Agreement, the
Company shall round up the total number of Common Shares purchasable hereunder
to the next whole Common Share. 

8 




          2.9     
Restricted Securities. MAC hereby agrees that the Agreement Shares to be
issued by the Company upon the proper exercise of the Conversion Rights will be
“restricted securities” under the Securities Act in that the Agreement Shares
will be issued pursuant to an exemption to the registration requirements of the
Securities Act, and MAC hereby represents, warrants and covenants to and with
the Company as follows: 

                         (a)      MAC
is, and on the Conversion Notice Date will be, an “accredited investor” as that
term is defined in Regulation D promulgated under the Securities Act. 

                         (b)      All
certificates representing the Agreement Shares will be endorsed with a
restrictive legend substantially similar to the following: 


  
    “THE SECURITIES REPRESENTED BY THIS CERTIFICATE
      HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"),
      AND HAVE BEEN OFFERED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION
      REQUIREMENTS OF THE ACT. SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR
      RESOLD OR OTHERWISE TRANSFERRED UNLESS THEY ARE REGISTERED UNDER THE APPLICABLE
      PROVISIONS OF THE ACT OR ARE EXEMPT FROM SUCH REGISTRATION.” 

  



                         (c)     
MAC is, and at the Conversion Notice Date will be, acquiring the Agreement
Shares for MAC’s own account, not as nominee or agent, and not with a view
toward the resale or distribution of any part thereof. MAC has no present
intention of selling, granting any participation in, or otherwise distributing
the Agreement Shares, and does not, and at the Conversion Notice Date, will not,
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to such person, or to any third party,
with respect to any of the Agreement Shares. 

Notwithstanding any provisions of this Agreement to the
contrary, the Company shall have no obligation to issue the Agreement Shares
upon the exercise of the Conversion Rights unless at the Conversion Notice Date
(i) there shall be an effective registration under the Securities Act with
respect thereto, or (ii) there is an available exemption from the registration
requirements of the Securities Act. 

ARTICLE III 
TRANSFER 

          3.1      Restrictions
on Transfer of Conversion Rights.

                         (a)      The
Agreement and the Conversion Rights hereunder are not transferable directly or
indirectly, in whole or in part, except in the case where MAC shall have
furnished to the Company, if requested, an opinion of legal counsel reasonably
satisfactory to the Company that such transfer is in compliance with applicable
U.S. federal and state securities laws, including the Securities Act. Any
transfers of this Agreement will be without charge to MAC except that any 9 




securities transfer taxes due on transfer of this Agreement
will be paid by MAC. Restrictive legends setting forth the above restrictions on
transfer will be set forth on any Agreement Shares issued on exercise of the
Conversion Rights. Notwithstanding the forgoing, any assignment, conveyance or
transfer made under this Section 3.1(a) shall be accompanied by a similar
assignment, conveyance or transfer of the NPORRI to such transferee of this
Agreement and the Conversion Rights. The rights and obligations of the Company
and MAC under this Agreement shall be binding upon and benefit their respective
permitted successors, assigns, heirs, administrators and transferees. 

                         (b)      Notwithstanding
Section 3.1(a), subject to the requirement that MAC furnish to the
Company, if requested, an opinion of legal counsel, reasonably satisfactory to
the Company that a transfer is in compliance with all applicable U.S. federal
and state securities laws, including the Securities Act, MAC may assign, convey
or transfer this Agreement and any rights hereunder without the prior written
consent of the Company to any Person that directly, or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control with
MAC or the parent of MAC, or a successor in interest to MAC which acquires the
voting control of MAC or all or substantially all of MAC’s assets (collectively,
the “MAC Affiliates”). Notwithstanding the forgoing, any assignment,
conveyance or transfer made under this Section 3.1(b) shall be
accompanied by a similar assignment, conveyance or transfer of the NPORRI to
such MAC Affiliate. The rights and obligations of the Company and MAC under this
Agreement shall be binding upon and benefit their respective permitted
successors, assigns, heirs, administrators and transferees. 

          3.2     
Restrictions on Transfer of the Agreement Shares. The Agreement Shares
may be resold or transferred pursuant only to an effective registration under
the Securities Act or to an available exemption from the registration
requirements of the Securities Act and the Company may refuse to register any
resale or transfer of the Agreement Shares not made pursuant to an effective
registration under the Securities Act or to an available exemption from the
registration requirements of the Securities Act. 

ARTICLE IV 
REGISTRATION RIGHTS 

          4.1     
Piggy-Back Registration Rights. If, at any time, the Company determines
to register any of its securities under the Securities Act for sale to the
public, whether for its own account or for the account of other security holders
or both (other than a registration statement on Form S-4 or S-8 or any successor
form) each such time it will give prompt written notice (but in no event less
than five business days prior to the anticipated filing date) to MAC of its
intention to do so and of the proposed method of distribution of such
securities, and such notice shall offer MAC the opportunity to register such
number of Registrable Securities as MAC may request in writing within five
business days after receipt of such written notice from the Company. Upon the
written request of MAC, which request must be received by the Company within
five business days after the giving of any such notice by the Company and shall
specify the Registrable Securities intended to be disposed of by MAC, the
Company will use all reasonable efforts to cause the Registrable 

10 




Securities as to which registration shall have been so
requested under this Section 4.1 to be included in the securities to be
covered by the registration statement proposed to be filed by the Company, all
to the extent and under the conditions such registration is permitted under the
Securities Act. In the event that any registration pursuant to this Section
4.1 shall be, in whole or in part, an underwritten public offering of Common
Shares, the number of shares of Registrable Securities to be included in such an
underwriting may be reduced if and to the extent that the managing underwriter
shall be of the opinion that the inclusion of some or all of the Registrable
Securities would adversely affect the marketing of the securities to be sold by
the Company therein. Any such limitation shall be imposed in such manner so as
to avoid any diminution in the number of shares the Company may register for
sale by giving first priority for the shares to be registered for issuance and
sale by the Company, and by giving second priority to the Registrable Securities
along with any other shares to be registered for sale by any shareholder of the
Company pursuant to the terms of any other agreement. Notwithstanding the
foregoing provisions, the Company may, in its sole discretion, terminate or
withdraw any registration statement referred to in this Section 4.1
without thereby incurring any liability to holders of Registrable Securities.


          4.2      Additional
  Provisions Concerning Registration. The following provisions of this Section
  4.2 are applicable to any registration statement filed pursuant to Section
  4.1:

                         (a)     
Costs and Expenses. The Company shall bear the entire cost and expense of
any registration or qualification of securities initiated under Section
4.1 of this Agreement. Notwithstanding the foregoing, MAC shall, however,
bear the fees of its own counsel and accountants and any transfer taxes or
underwriting discounts or commissions applicable to Agreement Shares sold by MAC
pursuant thereto. 

                         (b)     
Indemnification. The Company shall indemnify and hold harmless MAC and
each underwriter, within the meaning of the Securities Act, who may purchase
from or sell for MAC any Agreement Shares from and against any and all losses,
claims, damages and liabilities (including reasonable fees and expenses of
counsel, which counsel may, if MAC requests, be separate from counsel for the
Company) caused by any untrue statement or alleged untrue statement of material
fact contained in the registration statement or any post-effective amendment
thereto or any registration statement under the Securities Act or any prospectus
included therein required to be filed or furnished by reason of this Article
IV or any application or other filing under any state securities law caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading to
which MAC or any such underwriter or any of them may become subject under the
Securities Act or other Federal or state statutory law or regulation, at common
law or otherwise, except insofar as such losses, claims, damages or liabilities
are caused by any such untrue statement or alleged untrue statement or omission
or alleged omission based upon information furnished to the Company by MAC or
underwriter expressly for use therein, which indemnification includes each
Person, if any, who controls any such underwriter within the meaning of the
Securities Act. 

                         (c)      Blue
Sky. If necessary, the Company shall use its reasonable efforts to qualify
the Agreement Shares for sale in such states as it is otherwise qualifying its
securities for 

11 




sale, or in respect of any registration required pursuant to
this Article IV, in such states as are reasonably requested by MAC.
However, in no event is the Company required to submit to the jurisdiction of
any state other than for the limited consent of service of process relating to
the offering or subject itself to taxation in any such jurisdiction. The Company
shall also provide MAC with a reasonable number of prospectuses upon request.


          4.3      Information
by MAC. MAC shall furnish to the Company such information regarding MAC, the
Registrable Securities held by MAC, and the distribution proposed by MAC of
Registrable Securities as the Company may reasonably request in writing and as
shall be required in connection with any registration (including any amendment
to a registration statement or prospectus), qualification or compliance referred
to in this Section 4.3. 

          4.4     
Lock-Up Agreements. MAC shall agree to be bound by such lock-up
agreements (not to exceed a period of one hundred eighty (180) days following
the date of the prospectus relating to any such underwriting) as the managing
underwriter of any such registration shall specify as a requirement to any such
underwriting, provided that the entry of MAC into such agreements shall be
conditioned upon all principal shareholders (i.e., all shareholders who
could reasonably be expected to be considered by the applicable underwriters to
be affiliates of the Company) and executive officers and directors of the
Company also agreeing to execute such lockup agreements. 

          4.5      Changes
in Common Shares or Agreement Shares. If, and as often as, there is any
change in the Common Shares or the Agreement Shares by way of a stock split,
stock dividend, combination, or reclassification, or through a merger,
consolidation, reorganization, or recapitalization, or by any other means,
appropriate adjustment shall be made in the provisions hereof so that the rights
and privileges granted in this Article IV shall continue with respect to
the Common Shares or the Agreement Shares as so changed. 

          4.6     
Rule 144. During any period in which the Company is subject to Section 13
or Section 15(d) of the Exchange Act, the Company will file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the Commission thereunder and will take such further
action as MAC may reasonably request, all to the extent required from time to
time to enable MAC to sell the securities underlying this Agreement without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the Commission. Upon the request of MAC, the Company will deliver to MAC a
written statement as to whether it has complied with such requirements. After
any sale of Registrable Securities pursuant to this Article IV, the
Company will, to the extent allowed by law, cause any restrictive legends to be
removed and any transfer restrictions to be rescinded with respect to such
Registrable Securities. 

          4.7      Exchange
Acceptance. As applicable, the Company will, at its expense, apply to and
obtain acceptance from such exchange, market or listing or quotation service or
bureau where its Common Shares are primarily traded, listed or quoted, for the
Agreement Shares, and maintain listing on such exchange, market or quotation
service bureau where the Company’s Common 

12 




Shares are primarily traded, listed or quoted, of all Agreement
Shares or other securities from time to time issuable upon the exercise or
exchange of this Agreement. 

          4.8      Contribution.
If the indemnification provided for in Section 4.2(b) from the
indemnifying party is unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities or expenses referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 4.8 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. 

          4.9      Continuation.
The Company’s agreements as set out in this Article IV shall continue in
effect for the Agreement Shares regardless of the exercise of the Conversion
Rights, for so long as there shall be Registrable Securities. 

          4.10     
Damages. The Company recognizes and agrees that MAC will suffer
irreparable harm and will not have an adequate remedy at law if the Company
fails to comply with any provision of this Article IV, and the Company
expressly agrees that, in the event of such failure, MAC or any other Person
entitled to the benefits of Article IV shall be entitled to seek specific
performance of any and all provisions hereof and may seek to enjoin the Company
from continuing to commit any further breach of this Article IV. 

          4.11     
  No Inconsistent Agreements. The Company has not entered into and will
  not enter into any registration rights agreement or similar arrangements the
  performance by the Company of the terms of which would in any manner conflict
  with, restrict or be inconsistent with the performance by the Company of its
  obligations under this Agreement.

13 




ARTICLE V 
MISCELLANEOUS 

          5.1     
Entire Agreement. This Agreement and the Credit Agreement contain the
entire agreement between MAC and the Company with respect to the Conversion and
supersedes all prior arrangements or understandings with respect thereto. 

          5.2     
GOVERNING LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF NEVADA APPLICABLE TO CONTRACTS MADE AND TO
BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES. 

          5.3      Waiver
and Amendment. Any term or provision of this Agreement may be waived at any
time by the Party which is entitled to the benefits thereof. Any term or
provision of this Agreement may be amended or supplemented at any time by
agreement of MAC hereof and the Company. Any waiver of any term or condition, or
any amendment or supplementation, of this Agreement shall be in writing. A
waiver of any breach or failure to enforce any of the terms or conditions of
this Agreement shall not in any way affect, limit or waive a Party’s rights
hereunder at any time to enforce strict compliance thereafter with every term or
condition of this Agreement. 

          5.4     
Severability. In the event that any one or more of the provisions
contained in this Agreement shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Agreement shall not, at the election of the Party for whom
the benefit of the provision exists, be in any way impaired. 

          5.5     
Copy of Agreements. A copy of this Agreement shall be filed among the
records of the Company. 

          5.6     
Notice. Any notice or other document required or permitted to be given or
delivered to MAC shall be in writing and delivered at, or sent by certified or
registered mail or by facsimile to MAC at, the last address shown on the books
of the Company maintained at the Principal Office of the Company for the
registration of this Agreement or at any more recent address of which MAC shall
have notified the Company in writing. Any notice or other document required or
permitted to be given or delivered to the Company, other than such notice or
documents required to be delivered to the Principal Office of the Company, shall
be delivered at, or sent by certified or registered mail or by facsimile to, the
Principal Office of the Company. 

          5.7     
Limitation of Liability; Rights as a Shareholder. No provision hereof, in
the absence of affirmative action by the Parties to initiate a Conversion as
provided in this Agreement to exercise the Conversion, and no mere enumeration
herein of the rights or privileges of MAC, shall give rise to any liability or
obligation of MAC to effectuate a Conversion or as a shareholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company. Except as otherwise provided herein, this Agreement does not confer
upon MAC any right to vote 

14 




or consent to or to receive notice as a shareholder of the
Company, in respect of any matters whatsoever. 

[The Remainder of this Page Intentionally Left Blank] 

15 




          IN
WITNESS WHEREOF, the Parties have caused this Agreement to be signed in their
names. 

          Dated:
July 29, 2008. 

DORAL ENERGY
  CORPORATION

	 	By: 	/s/
      Paul Kirkitelos 
	 	  	       Paul Kirkitelos
  
	 	  	       President & CEO
    


 

MACQUARIE
INVESTMENTS, LLC., 
a Delaware limited liability
company 

	 	By: 	/s/
      Brian Hughes 
	 	Name: 	Brian
      Hughes 
	 	Title: 	Executive Director 
	 	  	  
	 	  	  
	 	By: 	/s/
      Paul B. Beck 
	 	Name: 	Paul
      B. Beck 
	 	Title: 	Executive Director 


SIGNATURE PAGE TO THE CONVERSION AGREEMENT