Exhibit 3.01

AMENDED AND RESTATED ARTICLES OF
INCORPORATION

OF

DAYBREAK OIL AND GAS, INC.

ARTICLE I - NAME

The
name of this corporation is DAYBREAK OIL AND GAS, INC. (the Corporation).

ARTICLE II - PURPOSE

The purpose
of the Corporation is to transact any and all lawful business for which
corporations may be incorporated under Title 23B of the Revised Code of
Washington, as amended (the Washington
Business Corporation Act).

ARTICLE III  REGISTERED OFFICE AND AGENT

The address
of the registered office of the Corporation is 925 Fourth Avenue, Suite 2900,
Seattle, Washington, 98104-1158, and the name of the registered agent at such
address is PTSGE Corp.

ARTICLE IV  DURATION

The
duration of the Corporation is perpetual.

ARTICLE V - DIRECTORS

The number
of directors constituting the board of directors of the Corporation (the Board) will be fixed in the manner
specified in the bylaws of the Corporation (the Bylaws). In the case of a vacancy in the Board because of a
directors resignation, removal or other departure from the Board, or because
of an increase in the number of directors, the remaining directors, by majority
vote, or the sole remaining director, in each case, although less than a quorum,
and not the shareholders, shall fill such vacancy. If for any reason there are
no directors in office, the vacancies will be filled by a special election by
shareholders.

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ARTICLE VI  CAPITAL SHARES

6.1
Classes. The authorized capital stock of the
Corporation shall consist of two classes of stock, designated as Common Stock
and Preferred Stock.

6.2
Common Stock. The total number of shares of Common
Stock that the Corporation will have authority to issue is Two Hundred Million
(200,000,000). The shares shall have a par value of $0.001 per share. Each
holder of Common Stock shall be entitled to one vote for each share of Common
Stock held. All of the Common Stock authorized herein shall have equal voting
rights and powers without restrictions in preference.

6.3
Preferred Stock. The total number of shares of
Preferred Stock that the Corporation will have authority to issue is Ten
Million (10,000,000). The Preferred Stock shall have a stated value of $0.001
per share. The authorized shares of Preferred Stock may be divided into and
issued in series. Authority is vested in the Board, subject to the limitations
and procedures prescribed by law, to divide any part or all of such Preferred
Stock into any number of series, to fix and determine relative rights and
preferences of the shares of any series to be established, and to amend the
rights and preferences of the shares of any series that has been established
but is wholly unissued. Within any limits stated in these Amended Articles of
Incorporation (Articles) or in
the resolution of the Board establishing a series, the Board, after the
issuance of shares of a series, may amend the resolution establishing the
series to decrease (but not below the number of shares of such series then
outstanding) the number of shares of that series, and the number of shares
constituting the decrease shall thereafter constitute authorized but
undesignated preferred shares. The authority herein granted to the Board to
determine the relative rights and preferences of the Preferred Stock shall be
limited to unissued shares, and no power shall exist to alter or change the
rights and preferences of any shares that have been issued. Preferred Stock, or
any series thereof, may have rights that are identical to those of Common
Stock.

6.4
Series A Convertible Preferred Stock. Two Million Four
Hundred Thousand (2,400,000) shares of Preferred Stock shall be designated and
known as Series A Convertible Preferred Stock (the Series A Preferred). The relative rights, preferences,
privileges and restrictions granted to or imposed upon the Series A Preferred
and the holders thereof are as follows:

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| | 6.4.1
 Dividends.                                                                                                                                                                                                                                                                                                                                                               
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| | (a) The
 holders of Series A Preferred shall be entitled to receive dividends at the
 rate of six percent (6%) per annum, payable out of the funds legally
 available therefor (whether in cash or in kind); dividends shall begin to
 accrue on the final closing date of the private placement by which such
 preferred shares were offered and sold, and shall be cumulative.
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| | (b) No
 dividends or other distributions shall be made with respect to the Common
 Stock, other than dividends payable solely in Common Stock, unless at the
 same time an equivalent dividend with respect to the Series A Preferred has
 been paid or set apart or                                                                                                            

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| | such equivalent dividend has been waived by the affirmative vote or
 written consent of the holders of not less than a majority of the outstanding
 shares of Series A Preferred. Any declared but unpaid dividends on the shares
 of Series A Preferred shall be paid upon the conversion of such shares into
 Common Stock either (at the option of the Corporation) by payment of cash or
 by the issuance of shares of Common Stock at the conversion rate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
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| | 6.4.2
 Liquidation Preference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
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| | (a) In
 the event of any liquidation, dissolution or winding up of this Corporation,
 either voluntary or involuntary, the holders of the Series A Preferred shall
 be entitled to receive, prior and in preference to any distribution of any of
 the assets or surplus funds of this Corporation to the holders of Common
 Stock by reason of their ownership thereof, and subject to the rights of any
 series of Preferred Stock that ranks on liquidation prior to the Series A
 Preferred, an amount equal to all accrued or declared but unpaid dividends on
 such shares, for each share of Series A Preferred then held by them. The
 remaining assets shall be distributed ratably to the holders of Common and
 Series A Preferred on a common equivalent basis.                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (b) (i) A
 consolidation or merger of this Corporation with or into any other
 corporation or corporations pursuant to which the shareholders of this
 Corporation prior to the merger or similar transaction shall own less than
 fifty percent (50%) of the voting securities of the surviving corporation,
 (ii) a sale, conveyance or disposition of all or substantially all of the
 assets of this Corporation, or (iii) the effectuation by this Corporation of
 a transaction or series of related transactions in which more than fifty
 percent (50%) of the voting power of this Corporation is disposed of (other
 than the sale of Preferred Stock), shall be deemed to be a liquidation,
 dissolution or winding up within the meaning of this subsection 6.4.2 and
 shall entitle the holders of Series A Preferred and Common Stock to receive
 at the closing in cash or securities the amount as specified in subsection
 6.4.2(a) above.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (c)
 Whenever the distribution provided for in this subsection 6.4.2 shall be
 payable in securities or property other than cash, the value of such
 distribution shall be the fair market value of such securities or other
 property as determined in good faith by the Board, and with respect to the
 gross amounts of their distributions, the holders of Series A Preferred shall
 participate ratably in the distribution of such securities or other property.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (d) The
Corporation shall give each holder of record of Series A Preferred written
notice of any impending event designated in subsection 6.4.2(b) above not
later than twenty (20) days prior to the shareholders meeting called to
approve such transaction, or twenty (20) days prior to the closing of such
transaction, whichever is earlier, and shall also notify such holders in
writing of the final approval of such transaction. The transaction shall in
no event take place sooner than twenty (20) days after this Corporation has
given the notice provided for herein; provided,however, that such period may
be shortened upon the written consent of the holders of Series A Preferred
who are                                                                                                                                                                                                                                          

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| | entitled to such notice rights or similar notice rights and who
 represent at least a majority of the voting power of all then outstanding
 shares of such Series A Preferred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
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| | 6.4.3
 Voting Rights. Except as otherwise expressly
 provided herein or as required by law, the holder of each share of Series A
 Preferred shall be entitled to the number of votes equal to the number of
 shares of Common Stock into which such share of Series A Preferred could then
 be converted, and with respect to such, shall have full voting rights and
 powers equal to the voting rights and powers of the holders of Common Stock
 (except as otherwise expressly provided herein or as required by law), voting
 together with the Common Stock as a single class, and shall be entitled to
 notice of any shareholders meeting in accordance with the Bylaws.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
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| | 6.4.4
 Conversion.The holders of Series A Preferred shall
 have conversion rights as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (a)
 Right to Convert. Each share of Series A Preferred
 shall be convertible, at the option of the holder thereof, at any time after
 the date of issuance of such share, at the office of this Corporation or any
 transfer agent for such stock, into three (3) fully paid and nonassessable
 shares of Common Stock. The conversion price shall initially be $1.00 per
 share Common Share for the Series A Preferred (the Series A Conversion Price), and shall be
 subject to adjustment as set forth herein.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
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| | (b)
 Automatic Conversion. Each share of Series A
 Preferred shall automatically be converted into shares of Common Stock at the
 then effective Conversion Price upon the earlier of (i) the date specified by
 vote or written consent or agreement of the holders of a majority of the
 outstanding shares of Series A Preferred; or (ii) if the Common Stock into
 which the Series A Convertible Preferred Stock are convertible are registered
 with the Securities and Exchange Commission and at any time after to the
 effective date of the registration statement the Companys Common Stock
 closes at or above $3.00 per share for twenty (20) out of thirty trading days
 (30) days.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
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| | (c)
 Mechanics of Conversion. Before any holder of Series
 A Preferred shall be entitled to convert the same into shares of Common
 Stock, he, she or it shall surrender the certificate or certificates thereof,
 duly endorsed, at the office of this Corporation or of any transfer agent for
 such stock, and shall give written notice to this Corporation at such office
 that he, she or it elects to convert the same and shall state therein the
 name or names in which he, she or it wishes the certificate or certificates
 for shares of Common Stock to be issued; provided, however,
 that in the event of an automatic conversion pursuant to subsection 6.4.4(b),
 the outstanding shares of Series A Preferred shall be converted automatically
 without any further action by the holders of such shares and whether or not
 the certificates representing such shares are surrendered to this Corporation
 or its transfer agent. This Corporation shall not be obligated to issue
 certificates evidencing the shares of Common Stock issuable upon such
 conversion unless the certificates evidencing such shares of Series A
 Preferred are either delivered to this Corporation or its transfer agent as
 provided above, or the holder notifies this Corporation or its transfer agent
 that such certificates have been lost, stolen or destroyed and executes an
 agreement satisfactory to this Corporation to indemnify this Corporation

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| | from any loss incurred by it in connection with such certificates.
 This Corporation shall, as soon as practicable after delivery of such
 certificate, or such agreement of indemnification in the case of a lost
 certificate, issue and deliver at such office to such holder of Series A
 Preferred a certificate or certificates for the number of shares of Common
 Stock to which such holder shall be entitled as aforesaid and a check payable
 to the holder in the amount of any cash amounts payable as the result of a
 conversion into fractional shares of Common Stock. Such conversion shall be
 deemed to have been made immediately prior to the close of business on the
 date of such surrender of the shares of Series A Preferred, or in the case of
 automatic conversion under subsection 6.4.4(b), on the date of closing of the
 public offering, and the person or persons entitled to receive the shares of
 Common Stock issuable upon such conversion shall be treated for all purposes
 as the record holder or holders of such shares of Common Stock on such date.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | (d) Adjustments to Series A Conversion Price for Diluting Issues.                                          
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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | (i)
 Special Definitions. For purposes of this subsection
 6.4.4(d), the following definitions shall apply:
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                             | (1)Options
 shall mean rights, options or warrants to subscribe for, purchase or
 otherwise acquire either Common Stock or Convertible Securities.                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                             |                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                             | (2)Original Issue
 Date shall mean the date on which the first share of any Series A
 Preferred is issued.                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                             |                                                                                                                                                                                                                                                             |                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                             | (3)Convertible
 Securities shall
 mean any evidences of indebtedness, shares (other than the Series A
 Preferred) or other securities convertible into or exchangeable for Common
 Stock.                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                             |                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                             | (4)Additional Shares
 of Common Stock shall mean all shares of Common Stock issued (or,
 pursuant to Article 6.4(d)(iii), deemed to be issued) by this Corporation
 after the Original Issue Date, other than shares of Common Stock issued or
 issuable:
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                             |                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                             |                                                                                                                                                                                                                                                             | (A)
 Upon conversion of shares of Series A Preferred;                                                               
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 To a commercial lender or lessor in a transaction that is approved by the
 Board;                              
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 As a dividend or distribution on the Series A Preferred;                                                       
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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                             |                                                                                                                                                                                                                                                             | (D)
 For which adjustment of the Conversion Price is made pursuant to subsection
 6.4.4(e);                         
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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                             |                                                                                                                                                                                                                                                             | (E)
 To officers, directors, employees or sales representatives of, or consultants
 to, this Corporation pursuant to

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 approved by the Board;                         
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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | (F)
 In connection with strategic business transactions that are approved by the
 Board; or                      
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 In connection with acquisitions of other companies or assets in transaction
 that are approved by the Board.
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| |  | (ii)
 No Adjustment of Series A Conversion Price. No
 adjustment in the Series A Conversion Price shall be made in respect of the
 issuance of Additional Shares of Common Stock unless the consideration per
 share for an Additional Share of Common Stock issued or deemed to be issued
 by this Corporation is less than the applicable Series A Conversion Price in
 effect on the date of, and immediately prior to, such issue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
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| |  | (iii)
 Deemed Issue of Additional Shares of Common Stock.
 In the event this Corporation at any time or from time to time after the
 Original Issue Date shall issue any Options or Convertible Securities or
 shall fix a record date for the determination of holders of any class of
 securities then entitled to receive any such Options or Convertible
 Securities, then the maximum number of shares of Common Stock (as set forth
 in the instrument relating thereto without regard to any provisions contained
 therein designed to protect against dilution) issuable upon the exercise of
 such Options or, in the case of Convertible Securities and Options therefor,
 the conversion or exchange of such Convertible Securities, shall be deemed to
 be Additional Shares of Common Stock issued as of the time of such issue or,
 in case such a record date shall have been fixed, as of the close of business
 on such record date, provided that Additional Shares of Common Stock
 shall not be deemed to have been issued unless the consideration per share
 (determined pursuant to subsection 6.4.4(d)(v) hereof) of such Additional
 Shares of Common Stock would be less than the Series A Conversion Price in
 effect on the date of and immediately prior to such issue, or such record
 date, as the case may be, and provided furtherthat in any such case
 in which Additional Shares of Common Stock are deemed to be issued:
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
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 further adjustments in the Series A Conversion Price shall be made upon the
 subsequent issue of Convertible Securities or shares of Common Stock upon the
 exercise of such Options or conversion or exchange of such Convertible
 Securities;                                                                                                                                                                                                                                                     
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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (2) If
 such Options or Convertible Securities by their terms provide, with the
 passage of time or otherwise, for any increase in the consideration payable
 to this Corporation, or decrease in the number of shares of Common Stock
 issuable, upon the exercise, conversion or exchange thereof, the Series A
 Conversion Price computed upon the original issue thereof (or upon the
 occurrence of a record date with respect thereto), and any subsequent
 adjustments based thereon, shall, upon any

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| |  |  | such increase or decrease becoming effective, be recomputed to
 reflect such increase or decrease insofar as it affects such Options or the
 rights of conversion or exchange under such Convertible Securities (provided,
 however, that no such adjustment of the Series A Conversion Price
 shall affect Common Stock previously issued upon conversion of the Series A
 Preferred);                                               
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| |  |  | (3) Upon
 the expiration of any such Options or any rights of conversion or exchange
 under such Convertible Securities which shall not have been exercised, the
 Series A Conversion Price computed upon the original issue thereof (or upon
 the occurrence of a record date with respect thereto), and any subsequent
 adjustments based thereon, shall, upon such expiration, be recomputed as if:                                
| |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                        | (A) In
 the case of Convertible Securities or Options for Common Stock, the only
 Additional Shares of Common Stock issued were the shares of Common Stock, if
 any, actually issued upon the exercise of such Options or the conversion or
 exchange of such Convertible Securities and the consideration received
 therefor was the consideration actually received by this Corporation for the
 issue of all such Options, whether or not exercised, plus the consideration
 actually received by this Corporation upon such exercise, or for the issue of
 all such Convertible Securities that were actually converted or exchanged,
 plus the additional consideration, if any, actually received by this
 Corporation upon such conversion or exchange, and
| |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                        | (B) In
 the case of Options for Convertible Securities, only the Convertible
 Securities, if any, actually issued upon the exercise thereof were issued at
 the time of issue of such Options and the consideration received by this
 Corporation for the Additional Shares of Common Stock deemed to have been
 then issued was the consideration actually received by this Corporation for
 the issue of all such Options, whether or not exercised, plus the
 consideration deemed to have been received by this Corporation (determined
 pursuant to subsection 6.4.4(d)(v)) upon the issue of the Convertible
 Securities with respect to which such Options were actually exercised;                                                                        
| |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  |  | (4) No
 readjustment pursuant to clauses (2) or (3) above shall have the effect of
 increasing the Series A Conversion Price to an amount which exceeds the lower
 of (A) the Series A Conversion Price on the original adjustment date, or (B)
 the Series A Conversion Price that would have resulted from any issuance of
 such Additional Shares of Common Stock between the original adjustment date
 and such readjustment date;

7

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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                     
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | (5) In
 the case of any Options that expire by their terms not more than thirty (30)
 days after the date of issue thereof, no adjustment of the Series A
 Conversion Price shall be made, except as to shares of Series A Preferred
 converted in such period, until the expiration or exercise of all such
 Options, whereupon such adjustment shall be made in the same manner provided
 in clause (3) above.
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | (iv)
 Adjustment of Series A Conversion Price Upon Issuance of Additional Shares of
 Common Stock. In the event this Corporation, at any
 time after the Original Issue Date, shall issue Additional Shares of Common
 Stock (including Additional Shares of Common Stock deemed to be issued
 pursuant to subsection 6.4.4(d)(iii)) without consideration or for a
 consideration per share less than the Series A Conversion Price applicable to
 a particular series of Preferred Stock in effect on the date of and
 immediately prior to such issue, then, and in such event, such Series A
 Conversion Price shall be reduced, concurrently with such issue, to a price
 (calculated to the nearest one-tenth of a cent) determined by multiplying
 such Series A Conversion Price by a fraction, the numerator of which shall be
 the number of shares of Common Stock outstanding immediately prior to such
 issuance plus the number of shares of Common Stock that the aggregate
 consideration received by this Corporation for the total number of Additional
 Shares of Common Stock so issued would purchase at such Series A Conversion
 Price, and the denominator of which shall be the number of shares of Common
 Stock outstanding immediately prior to such issuance plus the number of such
 Additional Shares of Common Stock so issued. For purposes of the above
 calculation, the number of shares of Common Stock outstanding shall not
 include in such calculation any Additional Shares of Common Stock issuable
 with respect to shares of Series A Preferred, Convertible Securities, or
 outstanding options, warrants or other rights for the purchase of shares of
 stock or convertible securities, solely as a result of the adjustment of the
 respective Series A Conversion Prices (or other conversion ratios) resulting
 from the issuance of Additional Shares of Common Stock causing such
 adjustment.
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | (v)
 Determination of Consideration. For purposes of this
 subsection 6.4.4(d), the consideration received by this Corporation for the
 issue of any Additional Shares of Common Stock shall be computed as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | (1)
 Cash and Property: Such consideration shall:                                                                                                                                                                                                                                                                                                                                                               
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                  | (A)
 Insofar as it consists of cash, be computed at the aggregate amount of cash
 received by this Corporation but excluding any amounts paid or payable for
 accrued interest or accrued dividends;
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                     
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                  | (B)
 Insofar as it consists of property other than cash, be computed at the fair
 value thereof at the time of such issue, as determined in good faith by the
 Board; and                           

8

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                                                                                                                                                                                                                                                                               | (C) In
 the event Additional Shares of Common Stock are issued together with other
 shares or securities or other assets of this Corporation for consideration
 which covers both, be the proportion of such consideration so received,
 computed as provided in clauses (A) and (B) above, as determined in good
 faith by the Board.                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | (2)
 Options and Convertible Securities. The
 consideration per share received by this Corporation for Additional Shares of
 Common Stock deemed to have been issued pursuant to subsection 6.4.4(d)(iii),
 relating to Options and Convertible Securities, shall be determined by
 dividing:
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                                                                                                                                                                                                                                                                               | (A) The
 total amount, if any, received or receivable by this Corporation as
 consideration for the issue of such Options or Convertible Securities, plus
 the minimum aggregate amount of additional consideration (as set forth in the
 instruments relating thereto, without regard to any provision contained
 therein designed to protect against dilution) payable to this Corporation
 upon the exercise of such Options or the conversion or exchange of such
 Convertible Securities, or in the case of Options for Convertible Securities,
 the exercise of such Options for Convertible Securities and the conversion or
 exchange of such Convertible Securities by
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                                                                                                                                                                                                                                                                               | (B) The
 maximum number of shares of Common Stock (as set forth in the instruments
 relating thereto, without regard to any provision contained therein designed
 to protect against dilution) issuable upon the exercise of such Options or
 the conversion or exchange of such Convertible Securities.                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (e)
 Adjustments to Series A Conversion Price for Stock Dividends and for
 Combinations of Subdivisions of Common Stock. In the
 event that this Corporation at any time or from time to time after the
 Original Issue Date shall declare or pay, without consideration, any dividend
 on the Common Stock payable in Common Stock or in any right to acquire Common
 Stock for no consideration, or shall effect a subdivision of the outstanding
 shares of Common Stock into a greater number of shares of Common Stock (by
 stock split, reclassification or otherwise than by payment of a dividend in
 Common Stock or in any right to acquire Common Stock), or in the event the
 outstanding shares of Common Stock shall be combined or consolidated, by
 reclassification or otherwise, into a lesser number of shares of Common
 Stock, then the Series A Conversion Price shall, concurrently with the
 effectiveness of such event, be proportionately decreased or increased, as
 appropriate. In the event that this Corporation shall declare or pay, without
 consideration, any dividend on the Common Stock payable in any right to
 acquire Common Stock for no consideration, then this Corporation shall be
 deemed to have made a dividend payable in Common Stock in an amount of shares
 equal to the maximum number of shares issuable upon exercise of such rights
 to acquire Common Stock.

9

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (f)
 Adjustments for Reclassification and Reorganization.
 If the Common Stock issuable upon conversion of the Series A Preferred shall
 be changed into the same or a different number of shares of any other class
 or classes of stock, whether by capital reorganization, reclassification or
 otherwise (other than a subdivision or combination of shares provided for in
 subsection 6.4.4(e) above or a merger or other reorganization referred to in
 subsection 6.4.2(c) above), then the Series A Conversion Price as then in
 effect shall, concurrently with the effectiveness of such reorganization or
 reclassification, be proportionately adjusted so that the Series A Preferred
 shall be convertible into, in lieu of the number of shares of Common Stock
 that the holders would have otherwise been entitled to receive, a number of
 shares of such other class or classes of stock equivalent to the number of
 shares of Common Stock that would have been subject to receipt by the holders
 upon conversion of the Series A Preferred immediately before that change.                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (g)
 No Impairment. This Corporation will not, by
 amendment of these Articles or through any reorganization, transfer of
 assets, consolidation, merger, dissolution, issue or sale of securities or
 any other voluntary action, avoid or seek to avoid the observance or
 performance of any of the terms to be observed or performed hereunder by this
 Corporation but will at all times in good faith assist in the carrying out of
 all the provisions of this Article VI and in the taking of all such action as
 may be necessary or appropriate in order to protect the conversion rights of
 the holders of the Series A Preferred against impairment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (h)
 Certificates as to Adjustments. Upon the occurrence
 of each adjustment or readjustment of the applicable Series A Conversion
 Price pursuant to this Article VI, this Corporation at its expense shall
 promptly compute such adjustment or readjustment in accordance with the terms
 hereof and prepare and furnish to each holder of Series A Preferred a
 certificate setting forth such adjustment or readjustment and showing in
 detail the facts upon which such adjustment or readjustment is based. The
 Corporation shall, upon the written request at any time of any holder of
 Series A Preferred, furnish or cause to be furnished to such holder a like
 certificate prepared by this Corporation setting forth (i) such adjustments
 and readjustments, (ii) the Series A Conversion Price at the time in effect,
 and (iii) the number of shares of Common Stock and the amount, if any, of
 other property which at the time would be received upon the conversion of Series
 A Preferred.                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (i)
 Notices. In the event of any taking by this
 Corporation of a record of the holders of any class of securities for the
 purpose of determining the holders thereof who are entitled to receive any
 dividend (other than a cash dividend) or other distribution, this Corporation
 shall mail to each holder of Preferred Stock at least thirty (30) days prior
 to the date specified therein, a notice specifying the date on which any such
 record is to be taken for the purpose of such dividend or distribution. In
 the event of any proposal by this Corporation to take any action that would
 result in any liquidation or deemed liquidation of this Corporation, this
 Corporation shall mail to each holder of Series A Preferred at least twenty (20)
 days prior to the date of such proposed transaction a notice specifying the
 proposed date of such transaction. Any notice required by the provisions of
 this Article VI to be given to the holders of shares of Series A Preferred
 shall be deemed given if deposited in the United States mail, postage
 prepaid, and addressed to each holder of record at its address appearing on
 the books of this Corporation. If the

10

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | mailing address of any holder of Series A Preferred is outside of the
 United States, a copy of any notice to be sent pursuant to Article VI shall
 be sent to such holder by telecopy or telex (with confirmation of receipt)
 and shall be deemed given upon transmission and any notices deposited in the
 mail shall be sent by registered airmail.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (j)
Issue Taxes. This Corporation shall pay any and all
issue and other taxes, excluding federal, state or local income taxes, that
may be payable in respect of any issue or delivery of shares of Common Stock
on conversion of shares of Series A Preferred pursuant hereto; provided,
however, that this Corporation shall not be obligated to pay any transfer
taxes resulting from any transfer requested by any holder in connection with
any such conversion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (k)
 Reservation of Stock Issuable Upon Conversion.This
 Corporation shall at all times reserve and keep available out of its
 authorized but unissued shares of Common Stock, solely for the purpose of
 effecting the conversion of the shares of Series A Preferred, such number of
 its shares of Common Stock as shall from time to time be sufficient to effect
 the conversion of all outstanding shares of Series A Preferred; and if at any
 time the number of authorized but unissued shares of Common Stock shall not
 be sufficient to effect the conversion of all then outstanding shares of
 Series A Preferred, this Corporation will take such corporate action as may,
 in the opinion of its counsel, be necessary to increase its authorized but
 unissued shares of Common Stock to such number of shares as shall be
 sufficient for such purpose, including, without limitation, engaging its best
 efforts to obtain the requisite shareholder approval of any necessary
 amendment to these Articles.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (l)
 Fractional Shares. No fractional shares shall be
 issued upon the conversion of any share or shares of Series A Preferred. All
 shares of Common Stock (including fractions thereof) issuable upon conversion
 of more than one share of Series A Preferred by a holder thereof shall be
 aggregated for purposes of determining whether the conversion would result in
 the issuance of any fractional share. If, after the aforementioned
 aggregation, the conversion would result in the issuance of a fraction of a
 share of Common Stock, this Corporation shall, in lieu of issuing any
 fractional share, pay the holder otherwise entitled to such fraction a sum in
 cash equal to the fair market value of such fraction on the date of
 conversion (as determined in good faith by the Board).                                                                                                                                                                                                               

6.5
Protective Provisions.So long as any Series A
Preferred is outstanding, this Corporation shall not, without the written
consent in lieu of a meeting, or the affirmative vote at a meeting called for
such purpose, of the holders of at least a majority of the shares of Series A
Preferred then outstanding:

(a) Change
as a whole, by subdivision or combination in any manner, the number of shares
of the Common Stock then outstanding into a different number of shares, with or
without par value, without making the identical change as a whole in the number
of shares of Series A Preferred then outstanding;

11

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(b) Amend,
alter or repeal, in any manner whatsoever, the designations, powers,
preferences, relative participating, optional or other special rights,
qualifications, limitations and restrictions for the benefit of the Series A
Preferred;

(c) Declare
or pay any dividend or make any distribution (whether in cash, shares of
capital stock of this Corporation, or other property) on shares of its Common
Stock (other than a dividend payable solely in shares of Common Stock);

(d)
Increase the number of authorized shares of Series A Preferred or Common Stock;

(e)
Authorize, create, issue or reclassify any other equity security (including any
security convertible into or exercisable for any equity security) having rights
or preferences senior to any of the rights or preferences of the Series A
Preferred;

(f) Amend
these Articles or the Bylaws in any manner that affects the rights of the
holders of Series A Preferred;

(g) Approve
the liquidation or dissolution of this Corporation or the sale of all or
substantially all of the assets of this Corporation; or

(h)
Authorize the repurchase by this Corporation of any shares of its capital
stock, except for the redemption or repurchase of shares of Common Stock from
employees or consultants upon termination of their employment or services
pursuant to agreements providing for such repurchase.

6.6
Issuance of Certificates.The Board shall have the
authority to issue shares of the capital stock of this Corporation and the
certificates therefor subject to such transfer restrictions and other
limitations as it may deem necessary to promote compliance with applicable
federal and state securities laws, and to regulate the transfer thereof in such
manner as may be calculated to promote such compliance or to further any other
reasonable purpose.

ARTICLE VII - BYLAWS

In
furtherance and not in limitation of the powers conferred by statute, the Board
is expressly authorized to make, adopt, repeal, alter, amend, and rescind the
Bylaws by a resolution adopted by a majority of the directors.

ARTICLE VIII  NO CUMULATIVE VOTING

Shareholders
of the Corporation do not have the right to cumulate votes in the election of
directors.

12

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ARTICLE IX  NO PREEMPTIVE RIGHTS

Shareholders
of the Corporation have no preemptive rights to acquire additional shares
issued by the Corporation, or any securities convertible into, or carrying or
evidencing any rights or option to purchase, any such shares, other than any preemptive rights otherwise
described within these Articles.

ARTICLE X  LIMITATION OF DIRECTOR LIABILITY;
INDEMNIFICATION

A director
of the Corporation will not be personally liable to the Corporation or its
shareholders for monetary damages for conduct as a director, except for
liability of the director for (i) acts or omissions that involve intentional
misconduct or a knowing violation of law by the director; (ii) conduct which
violates Section 23B.08.310 of the Washington Business Corporation Act,
pertaining to unpermitted distributions to shareholders or loans to directors;
or (iii) any transaction from which the director will personally receive a
benefit in money, property, or services to which the director is not legally
entitled. If the Washington Business Corporation Act is amended to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation will be
eliminated or limited to the fullest extent permitted by the Washington
Business Corporation Act, as so amended. Any repeal or modification of the
foregoing paragraph by the shareholders of the Corporation will not adversely
affect any right or protection of a director of the Corporation for or with
respect to any acts or omissions occurring prior to such repeal or
modification.

The
Corporation is authorized to indemnify, agree to indemnify or obligate itself
to advance or reimburse expenses incurred by its Directors, officers, employees
or agents in any Proceeding (as defined in the Washington Business Corporation
Act) to the fullest extent permitted under the laws of the State of Washington,
as may now or hereafter exist.

13

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SIGNATURE PAGE TO 
AMENDED AND RESTATED ARTICLES OF INCORPORATION 
OF 
DAYBREAK OIL AND GAS, INC.

The
undersigned duly authorized corporate officer of Daybreak Oil and Gas, Inc.
certifies that the above is a true and correct copy of the duly adopted and
authorized Amended and Restated Articles of Incorporation of Daybreak Oil and
Gas, Inc., as of the date referenced below.

Signed
on July 17, 2009.

| |                                       
| | --------------------------------------
| | /s/JAMES F.
 WESTMORELAND             
| |                                       
| | James F.
 Westmoreland                
| | President
 and Chief Executive Officer

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