Exhibit 10.1


 


ASSET
PURCHASE AGREEMENT


 


BETWEEN


 


COLFAX
EXPLORATION PARTNERS I, LLC. 


 


AS
SELLER,


 


AND


 


MAXWELL
RESOURCES, INC. 


 


AS
BUYER


 


As of
July 27, 2015 


 


TABLE
OF CONTENTS


 


	 	 	Page
	ARTICLE
    I PURCHASE AND SALE OF PURCHASED ASSETS	1
	1.1	Purchased
    Assets	1
	1.2	Excluded
    Assets	2
	1.3	Assumed
    Liabilities	2
	1.4	Purchase
    Price	2
	1.5	Allocated
    Values	2
	1.6	Adjustments
    to Base Purchase Price. - N/A	3
	1.7	Apportionment
    of Certain Taxes	3
	1.8	Closing
    Date Adjustment to Purchase Price.	3
	1.9	Post-Closing
    Adjustments to Base Purchase Price.	3
	1.10	Prepaid
    JOA Funds	4
	1.11	Division
    of Ownership.	4
	1.12	No
    Duplicative Effect; Methodologies	5
	 	 	 
	ARTICLE
    II CLOSING	5
	2.1	Closing	5
	2.2	Deliveries
    by Seller at Closing	5
	2.3	Deliveries
    by Buyer at Closing	5
	2.4	Proceedings
    at Closing	5
	 	 	 
	ARTICLE
    III REPRESENTATIONS AND WARRANTIES OF SELLER	5
	3.1	Organization
    and Qualification.	5
	3.2	Authority;
    Binding Effect.	6
	3.3	Governmental
    Entities	6
	3.4	No
    Conflicts	6
	3.5	Contracts	6
	3.6	Title
    and Condition of Purchased Assets	7
	3.7	Oil
    and Gas Interests.	7
	3.8	Oil
    and Gas Operations	7
	3.9	Environmental
    Matters	7
	3.10	Compliance
    with Laws	8
	3.11	No
    Litigation	8
	3.12	Brokers’
    Fees	8
	3.13	Books
    and Records	8
	3.14	Bankruptcy	8
	3.15	AFEs
    and Other Commitments	8
	3.16	Well
    Status; Plugging and Abandonment	8
	3.17	Current
    Bonds	8


 





	Asset Purchase Agreement between	Proprietary and Confidential
	Colfax Exploration Partners I, LLC and Maxwell Resources, Inc.	Intended for Addressee Only



















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OF CONTENTS


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		 	Page
	3.18	Non-Consent
    Operations	8
	3.19	Consents	8
	3.20	Permits	9
	3.21	Payout
    Balances; Imbalances	9
	3.22	Tax
    Matters	9
	3.23	Tax
    Partnership	9
	3.24	Royalties
    and Suspense	9
	3.25	No
    Casualty Loss	9
	 	 	 
	ARTICLE
    IV REPRESENTATIONS AND WARRANTIES OF BUYER	9
	4.1	Organization
    and Qualification	9
	4.2	Authority;
    Binding Effect	9
	4.3	Governmental
    Entities	10
	4.4	No
    Conflicts	10
	4.5	No
    Litigation	10
	4.6	Brokers’
    Fees	10
	4.7	Securities
    Laws	10
	4.8	Restricted
    Securities; Restriction on Transfers	10
	4.9	Records
    and Independent Evaluation	10
	 	 	 
	ARTICLE
    V COVENANTS	11
	5.1	Post-Closing
    Covenants	11
	5.2	Expenses	11
	5.3	Access
    to Purchased Assets and Records	12
	5.4	Further
    Assurances	12
	5.5	Delivery
    of Books and Records to Buyer	12
	5.6	Tax
    Matters	12
	5.7	Covenants
    and Agreements of Buyer	13
	 	 	 
	ARTICLE
    VI TITLE MATTERS	13
	6.1	Title
    Information	13
	6.2	Defensible
    Title	13
	6.3	Permitted
    Encumbrances	13
	6.4	Title
    Defect	14
	6.5	Title
    Defect Value	15
	6.6	Title
    Defect Notice	15
	6.7	Accepted
    Title Liabilities	15
	6.8	Seller’s
    Cure Right; Adjustments to Purchase Price	15
	6.9	Disputes
    Relating to Title Defect Value	16
	6.10	Adjustment
    to Purchase Price; Title Defect Deductible	16
	6.11	Preference
    Rights and Transfer Requirements	16
	6.12	Upward
    Defect Adjustments	16
	6.13	No
    Title Representation or Warranty	17
	 	 	 
	ARTICLE
    VII RESERVED	17
	 	 
	ARTICLE
    VIII INDEMNIFICATION	17
	8.1	Indemnification
    by Seller	17
	8.2	Indemnification
    by Buyer	17
	8.3	Indemnification
    Claims	17
	8.4	Survival
    of Representations, Warranties and Covenants	20
	8.5	Limitations	20
	8.6	Treatment
    of Indemnification Payments	20


 





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TABLE
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	 	 	Page
	ARTICLE
    IX RESERVED	20
	 	 
	ARTICLE
    X DEFINITIONS	20
	 	 
	ARTICLE
    XI MISCELLANEOUS	27
	11.1	Press
    Releases and Announcements	27
	11.2	No
    Third Party Beneficiaries	27
	11.3	Entire
    Agreement	27
	11.4	Assignment
    and Delegation	27
	11.5	Successors
    and Assigns	27
	11.6	Counterparts
    and Facsimile Signature	28
	11.7	Headings	28
	11.8	Notices	28
	11.9	Governing
    Law	29
	11.10	Suspended
    Funds	29
	11.11	Amendments	29
	11.12	Severability	29
	11.13	Sellers’
    Obligations Several Not Joint	29
	11.14	Sellers’
    Representative	29
	11.15	Submission
    to Jurisdiction	30
	11.16	Construction	30
	11.17	Limitation
    on Damages	30
	11.18	Minimum
    Royalty Litigation	31
	 	Signature
    Page	32


 


Schedules
and Exhibits


 


	Schedule
    1.5	—	Allocated
    Values
	Schedule
    1.6	—	Prepaid
    Expenses (N/A)
	Schedule
    3.3	—	Governmental
    Entities (N/A)
	Schedule
    3.4	—	No
    Conflicts (N/A)
	Schedule
    3.5	—	Contracts;
    Leases
	Schedule
    3.6	—	Title
    and Condition of Purchased Assets
	Schedule
    3.8	—	Oil
    and Gas Operations
	Schedule
    3.9	—	Environmental
    Matters (N/A)
	Schedule
    3.10	—	Compliance
    with Laws (N/A)
	Schedule
    3.11	—	No
    Litigation (N/A)
	Schedule
    3.12	—	Brokers’
    Fees (N/A)
	Schedule
    3.15	—	AFEs
    and Other Commitments (N/A)
	Schedule
    3.16	—	Well
    Status and Plugging & Abandonment (See Schedule 3.8)
	Schedule
    3.17	—	Current
    bonds (N/A)
	Schedule
    3.18	—	Non-Consent
    Operations (N/A)
	Schedule
    3.19	—	Consents
    (N/A)
	Schedule
    3.20	—	Permits
    (N/A)
	Schedule
    3.21(a)	—	Payout
    Balances (N/A)
	Schedule
    3.21(b)	—	Imbalances
    (N/A)
	Schedule
    3.22	—	Tax
    Matters (N/A)
	Schedule
    3.23	—	Tax
    Partnership (N/A)
	Schedule
    3.24	—	Royalties
    and Suspense (N/A)
	Schedule
    5.1	—	Governmental
    Approvals (N/A)
	Schedule
    6.3(k)	—	Preferential
    Rights of Third Persons to Purchase Production (N/A)
	Schedule
    10	—	Additional
    Properties (N/A)





 





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TABLE
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	Exhibit
    A	—	Leases
    and Contracts
	Exhibit
    B	—	Outside
    Opinion on Transaction and Reserve Report
	Exhibit
    C	—	Excluded
    Fee Mineral Interests, Royalty Interests and Overriding Royalty Interests (N/A)
	Exhibit
    D	—	Bonds,
    etc. to be Replaced at Closing (N/A)
	Exhibit
    E	—	Map
    of Additional Properties Area (N/A)
	Exhibit
    F	—	Water
    Rights (N/A)
	Exhibit
    G	—	Transition
    Services Agreement (N/A)
	Exhibit
    H	—	NOT
    USED (N/A)
	Exhibit
    I	—	Forms
    of Assignment and Bill of Sale
	Exhibit
    J	—	Form
    of Escrow Agreement (N/A)
	Exhibit
    K	—	List
    of Counties and Townships for Post-Closing Agreement (N/A)
	Exhibit
    L	—	Post-Closing
    Agreement (N/A)
	Exhibit
    M	—	Corporate
    Authority For Asset Purchase
	Exhibit
    N	—	Assignments
    and Notices





 





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ASSET
PURCHASE AGREEMENT


 


This
Asset Purchase Agreement is dated July 27, 2015, and is between Colfax Exploration Partners I, a Texas limited liability company,
(“Seller” or “Sellers”), and Maxwell Resources, Inc., a Nevada corporation (“MAXE” or “Buyer”).


 


INTRODUCTION:


 


Seller
owns certain interests in certain oil and gas properties and related assets in the state of Texas.


 


Seller
desires to sell to Buyer, and Buyer desires to purchase from Seller, Seller’s interest in and to such oil and gas properties
and related assets upon the terms in this Agreement.


 


The
Parties therefore agree as follows:


 


ARTICLE
I


PURCHASE
AND SALE OF PURCHASED ASSETS


 


1.1   
Purchased Assets. Subject to the terms and conditions in this Agreement, Seller agrees to sell to Buyer, and Buyer agrees
to purchase from Seller all of Seller’s rights, titles, and interests in and to the following (the “Purchased Assets”):


 


(a)   
All of the oil and gas leases described in Exhibit A whether Seller’s interest is correctly or incorrectly described
in Exhibit A (each, a “Lease” and sometimes, collectively, the “Leases”);


 


(b)   
The Hydrocarbon wells described in Exhibit B hereto (“Wells”) which are drilled or subject to a
well proposal, whether pursuant to a joint operating agreement or otherwise, on the Leases or on pooled units which include
the Leases (the Wells together with the Leases are hereinafter collectively referred to as the “Subject
Interests”);


 


(c)   
To the extent transferable or assignable, all presently existing and valid operating agreements, oil, gas or mineral
unitization, pooling, and/or communitization agreements, declarations and/or orders (including, without limitation, all units
formed under orders, rules, regulations, or other official acts of any federal, state, or other authority having
jurisdiction, and voluntary unitization agreements, designations or declarations), production sales contracts, and other
agreements and contracts described in Schedule 3.5 to the extent that they relate to any of the properties described
in subsections (a) and (b) above (each an “Assigned Contract” and, collectively, the “Assigned
Contracts”);


 


(d)   
All surface or subsurface machinery, equipment, platforms, facilities, supplies or other property of whatsoever kind or nature,
wherever located, which relate to or are useful or being held for use for the exploration, development, or maintenance of any
of the Subject Interests and the production of Hydrocarbons from the Subject Interests, or the treatment, storage, gathering,
transportation or marketing of the production of the Subject Interests or allocated to the Subject Interests (collectively, the
“Equipment”);


 


(e)   
All: (i) Hydrocarbons produced from or attributable to the Leases and Wells with respect to all periods after the Effective Time;
and (ii) proceeds from such Hydrocarbons;


 


(f)   
To the extent owned or licensed by Seller and to the extent it can be licensed, sublicensed or transferred without payment of
license or transfer fees, or to the extent Buyer agrees in its sole discretion to pay a Third Person for applicable license or
transfer fees, a non-exclusive license in form and substance reasonably acceptable to Seller and Buyer (or sublicense (reasonably
acceptable to the owner of the information, Seller and Buyer), as applicable) of all geophysical, seismic and related technical
data relating to the lands covered by the Leases or pooled with those lands, together with any data (other than seismic data)
relating to reserves or otherwise relating to the Subject Interests;


 


(g)   
All books, files, abstracts, title opinions, title reports, land and lease files, surveys, filings, well logs, production reports
and reports with Governmental Entities, Tax information and Tax Returns (excluding all income tax returns), maps, geological and
geophysical data, and records of Seller related to the operation or ownership of the Purchased Assets, excluding seismic data,
studies and information that Seller is prohibited from sharing, and for which no consent to assignment is obtained following Reasonable
Best Efforts to obtain such consent (including allowing Buyer to pay any transfer fee or similar cost) (collectively, the “Records”);


 


(h)   
All rights, claims and causes of action to the extent attributable to ownership, use, maintenance or operation of the Purchased
Assets after the Effective Time, including past, present or future claims, whether or not previously asserted by Seller;


 


(i)   
All: (i) fees, proceeds, revenues, accounts, instruments and general intangibles and economic benefits attributable to the
Purchased Assets with respect to any period of time after the Effective Time; (ii) Liens in favor of Seller, including Liens
securing payment for production of Hydrocarbons produced from the Purchased Assets (but only to the extent such Liens relate
to the period after the Effective Time), whether choate or inchoate, under any Law or under any of the Assigned Contracts,
arising from the ownership, sale or other disposition after the Effective Time of any of the Purchased Assets; and (iii) any
claim of indemnity, contribution or reimbursement relating to the Assumed Liabilities;


 





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(j)   
All intangible rights, inchoate rights, transferable rights under warranties made by prior owners, manufacturers, vendors and
Third Persons, and rights accruing under applicable statutes of limitation or prescription, to the extent related or attributable
to the Purchased Assets;


 


(k)   
To the extent assignable by Seller, all licenses, permits, approvals, consents, franchises, certificates and other authorizations
and other rights granted by Governmental Entities and all certificates of conveniences or necessity, immunities, privileges, grants
and other rights that relate primarily to the ownership, use, maintenance or operation of the Purchased Assets; and


 


1.2   
Excluded Assets. Notwithstanding Section 1.1, the Purchased Assets do not include the following assets of Seller (the “Excluded
Assets”):


 


(a)   
All rights and choses in action, arising, occurring or existing in favor of Sellers prior to the Effective Time or arising out
of the operation of or production from the Purchased Assets prior to the Effective Time (including any and all contract rights,
claims, receivables, revenues, recoupment rights, recovery rights, accounting adjustments, mispayments, erroneous payments or
other claims of any nature in favor of Sellers and relating and accruing to any time period prior to the Effective Time); provided,
however, notwithstanding anything herein to the contrary, Excluded Assets shall not include any rights and choses in action
arising or attributable to any royalty litigation with respect to the Purchased Assets regardless of whether such rights or choses
in action are attributable to periods prior to, on or after the Effective Time;


 


(b)   

Any accounts payable accruing before the Effective Time;


 


(c)   

All corporate, financial, Tax and legal (other than title) records of Sellers;


 


(d)   

All contracts of insurance or indemnity;


 


(e)   
All Hydrocarbon production from or attributable to production from the Properties with respect to all periods prior to the Effective
Time as described in Section 1.6 and all proceeds attributable thereto;


 


(f)   

Any refund of costs, Taxes or expenses borne by Sellers attributable to the period prior to the Effective Time;


 


(g)   
All deposits, cash, checks, funds and accounts receivable attributable to Sellers’ interests in the Properties with respect
to any period of time prior to the Effective Time;


 


(h)   
Other than as set forth in Section 1.1(f), Section 1.1(g) or to the extent used exclusively in the operation of the Purchased
Assets, the computer or communications software or intellectual property (including tapes, data and program documentation and
all tangible manifestations and technical information relating thereto) owned, licensed or used by Sellers;


 


(i)   
Any logo, service mark, copyright, trade name or trademark of or associated with Sellers or any Affiliate of Sellers or any business
of Sellers or of any Affiliate of Sellers;


 


(j)   

All vehicles, offices and related office equipment;


 


(k)   
All gathering or other pipeline systems and related equipment, inventory, easements, licenses and rights of way currently or subsequently
owned by Sellers or any Affiliate of Sellers including wellsite flow lines;


 


(l)   
Other than as set forth in Section 1.1(f) or Section 1.1(g), any seismic data, geological or geophysical data, or other similar
data relating to the Purchased Assets or any interpretations thereof or other data or records related thereto that Sellers may
not assign or transfer under its existing agreements and licenses without making any additional payments or incurring any liability
or obligation; and


 


1.3   
Assumed Liabilities. Subject to the terms and conditions in this Agreement, at Closing, Buyer shall assume and become responsible
for all Assumed Liabilities. Other than the Assumed Liabilities, Buyer will not assume any Liabilities of Seller (the “Excluded
Liabilities”).


 


1.4    Purchase
Price. The Consideration for the Purchased Assets shall be warrants (the “Warrants”) to purchase
67,109,000 shares of common stock, par value $0.001 per share of the Buyer (the “Shares” and collectively with
the Warrants, the “Securities”). The warrants shall be exercisable for a term of seven (7) years at a price which
represents the VWAP of the Buyer’s common stock for the 45 trading days prior to November 13, 2014. A form of warrant
is attached hereto as Exhibit J.


 


(a)   
For federal tax purposes, the sale of the Purchased Assets shall occur on the date Sellers obtain the Post-Closing Agreement or
Buyer elects to waive the Sellers’ obligation to obtain the Post-Closing Agreement.


 





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1.5    Allocated
Values. Schedule 1.5 shows the agreed allocation of the purchase price (“Base Purchase Price”) plus
the agreed allocation of the price for the Additional Properties among the Wells, the Leases and the other Purchased Assets.
Such values (singularly, the “Allocated Value,” and collectively, the “Allocated
Values”) shall be binding for purposes of adjusting the Base Purchase Price under Section 1.6, Section 5.3, and
Article VI. For purposes of Tax filings, the Allocated Values shall be increased or decreased as follows: (a) any adjustments
to the Base Purchase Price under Section 1.6, Section 5.3, or Article VI shall be applied to the amounts in Schedule
1.5 for the particular affected Purchased Assets, if determinable; and (b) any adjustments to the Base Purchase
Price under Section 1.6 or Article VI that are not specific to any particular Purchased Asset or Purchased Assets (for
example, general and administrative expense) shall be applied pro rata to each Purchased Asset allocation in Schedule
1.5 in proportion to the amount of each. Seller and Buyer each agrees that (i) the Allocated Values shall be used by it
as the basis for reporting asset values and other items for purposes of all federal, state, and local Tax returns,
including Internal Revenue Service Form 8594, and (ii) neither it nor its Affiliates will take positions inconsistent with
the Allocated Values in notices to Governmental Entities, in audit or other proceedings with respect to Taxes, in notices
to preferential purchaser right holders, or in other documents or notices relating to the Transactions.


 


1.7   
Apportionment of Certain Taxes. All Property Taxes and Hydrocarbon Taxes attributable to the period before the Effective
Time shall be for Seller’s account and all Taxes attributable to the period after and including the Effective Time shall
be for Buyer’s account. All Property Taxes assessed with respect to the Purchased Assets for year 2015 shall be prorated
based on the number of days in such period that occur before the Effective Time, on the one hand, and the number of days in such
period that include or occur after the Effective Time, on the other hand. All Hydrocarbon Taxes shall be deemed attributable to
the period during which such production occurred. The apportionment of Property Taxes and Hydrocarbon Taxes between the Parties
shall take place in the Adjustment Statement and the Final Adjustment Statement using estimates of such Taxes if actual numbers
are not available. If estimates of such Taxes are used in the Adjustment Statement and the Final Adjustment Statement to apportion
Taxes, upon determination of the actual amount of such Taxes, (a) Seller shall pay to Buyer an amount equal to the excess, if
any, of the actual Property Taxes and Hydrocarbon Taxes allocable to Seller over the estimated amount of such Taxes allocated
to Seller, and (b) Buyer shall pay to Seller an amount equal to the excess, if any, of the estimated amount of Property Taxes
and Hydrocarbon Taxes allocated to Seller over the actual amount of such Taxes allocable to Seller.


 


1.8    Closing Date Adjustment
to Purchase Price.


 


(a)   
At least three, but no more than five, Business Days prior to the expected Closing Date, Sellers’ Representative shall deliver
to Buyer a written statement (the “Adjustment Statement”) setting forth Seller’s good faith determination
of each adjustment to the Purchase Price required under this Agreement and showing the calculation of such adjustments (the “Initial
Adjustment Amount”). Sellers’ Representative shall attach to the Adjustment Statement such supporting documentation
and other data as is reasonably necessary to provide a basis for the Initial Adjustment Amount shown in the Adjustment Statement.


 


(b)   
If Buyer has any questions or disagreements regarding the Adjustment Statement, then, upon request by Buyer at least two Business
Days prior to the Closing Date, Sellers’ Representative and Buyer shall in good faith attempt to resolve any disagreements,
and Sellers’ Representative shall afford Buyer the opportunity to examine the Adjustment Statement and such supporting schedules,
analyses and workpapers on which the Adjustment Statement is based or from which the Adjustment Statement is derived as are reasonably
requested by Buyer. Sellers’ Representative shall give personnel, accountants and representatives of Buyer reasonable access
to Sellers’ Representative’s premises and to its books and records for purposes of reviewing Seller’s calculation
of the Initial Adjustment Amount and will cause appropriate personnel of Seller to assist Buyer and Buyer’s personnel, accountants
and representatives, with no charge to Buyer for such assistance, in Buyer’s review of such calculation.


 


(c)   
If Buyer and Sellers’ Representative agree on changes to the Initial Adjustment Amount based on such discussions, then the
Closing Date Aggregate Purchase Price shall be paid at Closing based on such changes. If Buyer and Seller do not agree on changes
to the Initial Adjustment Amount, then the Closing Date Aggregate Purchase Price shall be paid at Closing based on the amounts
provided in the Adjustment Statement. In either such case, appropriate adjustments to the Base Purchase Price shall be made after
Closing under Section 1.9.


 


(d)   
If the Initial Adjustment Amount shown on the Adjustment Statement is a positive number, then the Base Purchase Price shall be
increased by such amount. If the Initial Adjustment Amount shown on the Adjustment Statement is a negative number, then the Base
Purchase Price shall be decreased by such amount. The Base Purchase Price as adjusted by the Initial Adjustment Amount (as such
may be modified pursuant to any comments of Buyer accepted by Seller) is referred to as the “Closing Date Aggregate Purchase
Price.”


 


1.9   
Post-Closing Adjustments to Base Purchase Price.


 


(a)   
After Closing, Sellers’ Representative shall review the Adjustment Statement and determine the actual Purchase Price
Adjustment. As promptly as practicable, but in no event later than 90 days after the Closing Date, Sellers’
Representative shall deliver to Buyer a written statement setting forth each adjustment to the Purchase Price required under
this Agreement and showing the calculation of such adjustments (the “Final Adjustment Statement”),
together with such supporting documentation and other data as is reasonably necessary to provide a basis for the Purchase
Price Adjustment shown in the Final Adjustment Statement. Sellers’ Representative shall give personnel, accountants and
representatives of Buyer reasonable access to Seller’s premises and to its books and records for purposes of reviewing
Seller’s calculation of the Purchase Price Adjustment and shall cause appropriate personnel of Sellers’
Representative to assist Buyer and Buyer’s personnel, accountants and representatives, with no charge to Buyer for such
assistance, in Buyer’s review of such calculation. As soon as reasonably practicable but not later than the 60th day
after Buyer receives the Final Adjustment Statement, Buyer shall deliver to Sellers’ Representative a written report
containing any changes that Buyer proposes to be made to the Final Adjustment Statement. The Parties shall undertake to agree
on the Final Adjustment Statement no later than 90 days after Sellers’ Representative has delivered it to
Buyer.


 





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(b)   
If the Parties do not agree on the Final Adjustment Statement within such 90-day period, either Buyer or Sellers (acting through
Sellers’ Representative) may submit any unresolved disagreements as to Buyer’s proposed changes as described above,
to a reputable mediator in Dallas, Texas for a final and binding determination, and Buyer and Seller shall execute any engagement,
indemnity and other agreements that such mediator may reasonably require in connection with or as a condition to such engagement.
Buyer and Seller shall cooperate diligently with any reasonable request of the mediator and furnish to the mediator any work papers
and other documents and information relating to such objections that the mediator may reasonably request and which are available
to such Party or its subsidiaries (or its independent public accountants). The Parties will be afforded the opportunity to present
to the mediator any material relating to the determination of the matters in dispute and to discuss such determination with the
mediator prior to the mediator’s delivery of written notice of determination and to the extent that a value has been assigned
to any objection that remains in dispute, the accounting firm shall not assign a value to such objection that is greater than
the greatest value for such objection claimed by a Party or less than the smallest value for such objection claimed by a Party.


 


(c)   
The fees and expenses of the accounting firm in making that determination shall be borne equally by Buyer, on the one hand, and
Seller, on the other hand. Upon resolution of Buyer’s disagreements, the Final Adjustment Statement (including any revisions
resolved or agreed to), shall be conclusive, final and binding on Buyer and Seller as to the Purchase Price Adjustment.


 


(d)   
Within three Business Days after the final determination of the Final Adjustment Statement under this Section 1.9 (by
agreement or arbitration), if: (i) the Base Purchase Price as adjusted by the Purchase Price Adjustment calculated based on
the Final Adjustment Statement exceeds the Closing Date Aggregate Purchase Price, then Buyer will pay to Seller such excess;
or (ii) the Closing Date Aggregate Purchase Price exceeds the Base Purchase Price as adjusted by the Purchase Price
Adjustment calculated based on the Final Adjustment Statement, then Seller will pay to Buyer such excess. Except for specific
costs which are expressly provided and accounted for in the final and binding Final Adjustment Statement, neither the Final
Adjustment Statement nor this Section 1.9 shall operate to waive, release or impair the indemnity and hold harmless
obligations of the Parties under Article VIII.


 


(e)   
Following the adjustments under the forgoing subsections (a) through (d), no further adjustments shall be made under this Section
1.9. Following such adjustments, and notwithstanding anything to the contrary contained in this Agreement, should Sellers receive
any bills or revenue with regard to the Purchased Assets for the period on or after the Effective Time, Sellers will forward such
bills or revenue to Buyer, and should Buyer receive any bills or revenue with regard to the Purchased Assets for the period prior
to the Effective Time, Buyer will forward such bills or revenue to Sellers.


 


1.10    
Prepaid JOA Funds. To the extent that as of Closing Seller holds funds received by Seller (in its capacity as operator
with respect to Operated Properties) as prepayments for items to be incurred after Closing, or incurred after the Effective Time
and not paid prior to Closing, under operating agreements which constitute Assigned Contracts and under which Buyer or its designee
is succeeding as operator (“Prepaid JOA Funds”): (a) no adjustment to the Base Purchase Price shall be made
with respect to such Prepaid JOA Funds; and (b) to the extent Buyer takes over payment responsibility for the relevant items as
successor operator, Seller shall deliver to Buyer at Closing, to an account(s) designated by Buyer in writing to Seller, an amount
of money equal to such Prepaid JOA Funds and an accounting of each of such prepayments and Buyer shall from and after such time
be responsible for the application of such Prepaid JOA Funds under the applicable operating agreement.


 


1.11   
Division of Ownership.


 


(a)   
Division of Hydrocarbons. After Closing, all hydrocarbons produced from the Subject Interests and not in storage tanks
above the pipeline connection or past a measuring point as of the Effective Time shall be owned by Buyer. All Hydrocarbons produced
from the Subject Interests and disposed of, or in storage tanks above the pipeline connection or past a measuring point as of
the Effective Time shall be owned by Seller. To the extent that Seller has sold Hydrocarbons (other than such Hydrocarbons described
in the preceding sentence) which constitute Purchased Assets after the Effective Time but prior to Closing, and the Base Purchase
Price has not been adjusted under Section 1.6 for such proceeds, Seller shall deliver such proceeds to Buyer promptly upon Seller’s
receipt.


 


(b)    Division
of Operating Expenses; Royalties. As between Buyer and Seller: (i) all Operating Expenses attributable to the Purchased
Assets before the Effective Time shall be borne by Seller; (ii) all Operating Expenses attributable to the Purchased Assets
after the Effective Time shall be borne by Buyer, except to the extent accounted for as an increase to the Base
Purchase Price in accordance with Section 1.6(a)(i); (iii) Seller shall retain responsibility for, and shall timely pay and
discharge (or cause to be paid and discharged), all royalties to the extent attributable to Hydrocarbons produced from the
Subject Interests before the Effective Time; (iv) Seller shall be responsible for and shall timely pay and discharge (or
cause to be discharged) all royalties with respect to payments that have been received by Seller prior to Closing to the
extent attributable to Hydrocarbons produced from the Subject Interests during the Interim Period, which payments and
discharges shall be accounted for as an increase in the Purchase Price under Section 1.6(a)(i); and (v) Buyer shall be
responsible for and shall timely pay and discharge (or cause to be discharged) all royalties with respect to payments that
are received by Buyer at or after Closing. If a Party receives after the Closing Date any bills or accounts or any
reimbursement in relation to Operating Expenses for which the other Party or Parties are responsible under this Section 1.11,
then the receiving Party shall promptly forward the same to the responsible Party or Parties (for payment, in the case of any
such bills or accounts). If a Party receives after the Closing Date any bill, account or reimbursement in relation to
Operating Expenses for which each Party is liable in part under this Section 1.11, the receiving Party shall promptly forward
a copy of the same to the other Party or Parties, but each Party shall be required to pay only such portion of any bill or
account for which it is responsible in accordance with this Section 1.11.


 





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1.12   
No Duplicative Effect; Methodologies. The provisions of Section 1.6 through Section 1.11 shall apply in such a manner so
as not to give the components and calculations duplicative effect to any item of adjustment and, except as otherwise expressly
provided in this Agreement, the Parties covenant and agree that no amount shall be (or is intended to be) included, in whole or
in part (either as an increase or reduction) more than once in the calculation of (including any component of) the Purchase Price
or Closing Date Aggregate Purchase Price, or any other calculated amount under this Agreement if the effect of such additional
inclusion (either as an increase or reduction) would be to cause such amount to be overstated or understated for purposes of such
calculation. The Parties acknowledge and agree that, if a conflict exists between a determination, calculation, methodology, procedure
or principle provided in the definitions in this Agreement on the one hand, and those provided by GAAP, on the other hand: (a)
the determination, calculation, methodology, procedure or principle provided in this Agreement shall control to the extent that
the matter is specifically provided for in this Agreement; and (b) the determination, calculation or methodology, procedure or
principle prescribed by GAAP shall control to the extent that the matter is not so addressed in this Agreement or requires reclassification
as an asset or liability to be included in a line item or specific adjustment.


 


ARTICLE
II


CLOSING


 


2.1   
Closing. Closing shall take place at the offices of the Buyer at 3131 McKinney Ave, Suite 600, Dallas, Texas 75204, commencing
at 9:00 a.m. on the date of this Agreement (the “Closing Date”).


 


2.2   
Deliveries by Seller at Closing. At Closing, Seller shall deliver to Buyer the following:


 


(a)   
two (2) original counterparts of an Assignment and Bill of Sale in the forms of Exhibits I-A and I-B hereto (including
any appropriate state, federal or Indian conveyances) duly executed by an authorized officer of Seller and acknowledged by a notary
public;


 


(b)   
change of operator forms, transfer orders or letters-in-lieu, or government approved assignment forms, in form reasonably acceptable
to both Parties duly executed by an authorized officer of Seller if applicable;


 


(c)   
all required partial releases and termination statements from any Person who has a Lien on any of the Properties (excluding Permitted
Encumbrances), in form reasonably satisfactory to Buyer;


 


(d)  
such other instruments as are necessary to consummate the Transactions (including a certificate of good standing of Seller
in its jurisdiction of incorporation, certified charter documents, certificates as to the incumbency of officers and the
adoption of authorizing resolutions);


 


(e)    see Exhibit “M” – on closing day Buyer will provide the Seller
with Consideration as authorized in Exhibit “M”.


 


2.3   
Deliveries by Buyer at Closing. At Closing, Buyer shall deliver to Seller the following:


 


(a)   
four original counterparts of an Assignment, Bill of Sale and Conveyance (including any appropriate state, federal or Indian conveyances)
duly executed by an authorized officer of Buyer and acknowledged by a notary public;


 


(b)   
the Closing Date Aggregate Purchase Price certificate immediately available to an account designated by Sellers’ Representative
at least two Business Days prior to the Closing Date;


 


(c)   
such other instruments as are necessary to consummate the Transactions (including a certificate of good standing of Buyer in its
jurisdiction of incorporation, certified charter documents, certificates as to the incumbency of officers and the adoption of
authorizing resolutions); and


 


2.4  
Proceedings at Closing. All proceedings to be taken and all documents to be executed and delivered at Closing shall be
deemed to have been taken and executed simultaneously, and, except as permitted under this Agreement, no proceedings shall be
deemed taken nor any document executed and delivered until all have been taken, executed and delivered.


 


ARTICLE
III


REPRESENTATIONS AND WARRANTIES OF SELLER



 


Except
as specifically provided hereinafter, Sellers, severally and not jointly, represent and warrant to Buyer that:


 


3.1   
Organization and Qualification.


 


(a)   
Colfax Exploration Partners I, LLC, represents and warrants that:


 


(i)   
It is a limited liability company that has been duly organized and is validly existing and in good standing under the laws of
the State of Texas, and Colfax Exploration Partners I, LLC has all requisite power and authority to carry on its business as currently
being conducted and to own or lease and operate the properties it owns or leases as and in the places now owned, leased or operated.
Colfax Exploration Partners I, LLC is duly qualified or licensed to do business and is in good standing in each jurisdiction in
which the character or location of its assets or properties (whether owned, leased or licensed) or the nature of its business
make such qualification necessary, except where the failure to be so qualified or in good standing, individually or in the aggregate,
has not had and could not reasonably be expected to have a material adverse effect on Colfax Exploration Partners I, LLC or the
Transactions. Colfax Exploration Partners I, LLC is in violation of any provision of its certificate of incorporation or bylaws
or other organizational documents.


 






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3.2   
Authority; Binding Effect.


 


(a)   
The execution and delivery by Seller of this Agreement and consummation by Seller of the Transactions have been duly and validly
authorized by all necessary corporate action on the part of Seller.


 


(b)   
This Agreement and each agreement, instrument or document being or to be executed and delivered by Seller in connection with the
Transactions (“Seller Related Documents”), upon due execution and delivery by Seller, will constitute, assuming
the due execution and delivery by the counterparties to the Seller Related Documents, the legal, valid, and binding obligation
of Seller, enforceable in accordance with its respective terms (except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar Laws relating to or limiting creditors’ rights generally or by application of equitable
principles regardless of whether such enforceability is considered in a proceeding at Law or in equity).


 


3.3   
Governmental Entities. Except as provided in Schedule 3.3 or as otherwise expressly provided in this Agreement,
Seller is not required to submit any material notice, report or other filing with any Governmental Entity in connection with its
execution or delivery of this Agreement or any of the Seller Related Documents or consummation of the Transactions and no consent,
approval or authorization of any Governmental Entity is required to be obtained by Seller in connection with the execution, delivery
and performance of this Agreement.


 


3.4   
No Conflicts. Except as provided in Schedule 3.4, the execution, delivery and performance of this Agreement and
any of the Seller Related Documents by Seller, and consummation of the Transactions, do not and will not:


 


(a)   
Conflict with or result in any breach of the provisions of, or constitute a default or require the consent of any Person under
the certificate of incorporation or bylaws or other organizational documents of Seller;


 


(b)(i)
To Seller’s Knowledge, violate any restriction to which Seller is subject or, with or without the giving of notice, the
passage of time, or both, (ii) violate (or give rise to any right of termination, cancellation or acceleration under) any mortgage,
deed of trust, license, lease, indenture, contract or other material agreement or instrument, whether oral or written, to which
Seller is a party, or by which it or any of the assets of Seller is bound (which will not be satisfied, assigned or terminated
on or prior to Closing as a result of the Transactions), (iii) result in termination of any such instrument or termination of
any provisions in such instruments, or (iv) result in the creation or imposition of any Lien upon the Purchased Assets; or


 


(c)
Constitute a violation of any applicable Law in any material respect.


 


3.5    Contracts. Schedule
3.5 is a true and complete list, by category, of the following types of agreements and contracts (but excluding the
Leases unless required to be disclosed pursuant to subsection (n) below) that are attributable to or affect the Subject
Interests or any other Purchased Assets (collectively, the “Material Contracts” and each, a
“Material Contract”): (a) any agreement(s) with any Affiliate(s) of Seller; (b) any agreement(s) for the
sale, exchange, or other disposition of Hydrocarbons produced from the Purchased Assets, any agreement(s) for the purchase of
Hydrocarbons, gathering contracts, processing contracts, transportation contracts, marketing contracts, disposal or injection
contracts, in each case that are not cancelable without penalty on not more than 60 days prior written notice; (c) any
agreement(s) to sell, lease, farm-out, or otherwise dispose of any of Seller’s interests in any of the Purchased Assets
other than conventional rights of reassignment; (d) any tax partnership(s) of Seller affecting any of the Purchased Assets;
(e) any operating agreement(s) to which Seller’s interests in any of the Purchased Assets are subject; (f) any
agreement(s) under which Seller has forfeited or not consented to, its right to participate in future oil and gas operations;
(g) any agreement(s) under which Seller has received an advance payment, prepayment or similar deposit and has a refund
obligation with respect to any natural gas or products purchased, sold, gathered, processed or marketed by or for Seller out
of the Purchased Assets; (h) any contract that requires Seller to expend more than $100,000 in any year in connection with
the Purchased Assets, (i) any option to purchase or call on the Hydrocarbons produced from the Purchased Assets; (j) any
title retention agreement(s) or Lien(s) affecting any of the Equipment; (k) any agreement creating an area of mutual interest
with respect to the Subject Interests; (l) any contract that can reasonably be expected to result in an aggregate revenue to
Seller of more than $100,000 in any year in connection with the Purchased Assets; (m) any non-compete or similar restrictive
agreements related to the Purchased Assets that would restrict, limit or prohibit the manner in which, or the locations in
which, Buyer or any of its Affiliates conducts business; (n) any Lease(s) with a remaining primary term of less than one year
or that contains a performance obligation that must be commenced within one year to maintain the Lease; and (o) any surface
use agreement to which Seller is a party or to which any of the Purchased Assets are subject other than as provided in the
applicable Lease. Buyer has been provided access to true and complete copies of all Material Contracts. Except as set
forth on Schedule 3.5, Seller is not in default under the terms of any Material Contract, and, to Seller’s
Knowledge there is no default existing or continuing by any other party under the terms of any Material Contract and each
Material Contract is in full force and effect in all material respects and is valid and enforceable by Seller in accordance
with its terms, assuming the due authorization, execution and delivery of the Material Contracts by each of the
counterparties to those agreements (except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws relating to or limiting creditors’ rights generally or by application of equitable
principles). Seller has not received or given any unresolved written notice of default, amendment, waiver, price
redetermination, market out, curtailment or termination with respect to any Material Contract.


 





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3.6   
Title and Condition of Purchased Assets. Except as provided in Schedule 3.6:

 


(a)   
Subject to any disclosed encumbrances acceptable to buyer, Seller has good and valid title to all Purchased Assets (other than
the Leases) and, to Seller’s Knowledge, such assets are in an operable state of repair adequate to maintain such normal operations
in a manner consistent with the past practices of Seller, normal wear and tear excepted.


 


(b)   
Other than any notices delivered under Section 6.6, Seller has not received any written notice of any claim asserting the existence
of a Title Defect in connection with any Subject Interest.


 


3.7   
Oil and Gas Interests.

 


(a)   
All payments (including all delay rentals, royalties, shut-in royalties (solely with respect to Leases for which Seller is the
operator of a Well located on such Leases) and valid calls for payment or prepayment under operating agreements) due and owing
by Seller under the Leases and Assigned Contracts have been and are being made (timely, and before the same became delinquent)
by Seller other than those delinquent payments that are contested by Seller in good faith in the normal course of business, and
to Seller’s Knowledge, all payments with respect to shut-in royalties due and owing by Seller under the Leases for which
Colfax Exploration Partners I, LLC is not the operator of a Well located on such Leases have been and are being made (timely, and
before the same became delinquent) by the operator of such Wells in all material respects other than those delinquent payments
that are contested by such operator in good faith in the normal course of business.


 


(b)   
Except as otherwise provided in Section 1.6(a)(iii), Seller is not obligated, by virtue of a prepayment arrangement, a “take
or pay” arrangement, production payment or any other arrangement, to deliver any Hydrocarbons produced from the Purchased
Assets at some future time without then receiving full payment therefor.


 


3.8   
Oil and Gas Operations. Except as provided in Schedule 3.8, to Seller’s Knowledge, (a) all Wells have been
drilled, completed, operated and produced in accordance with generally accepted oil and gas field practices and in compliance
in all material respects with applicable leases, pooling and unit agreements, joint operating agreements and Laws, and (b) all
Wells and Equipment have been properly maintained and are suitable for their intended purposes. Wells are currently shut-in.


 


3.9   
Environmental Matters. Except as provided in Schedule 3.9,

 


(a)   
To Seller’s Knowledge, (i) Seller and the operations on the Leases are in compliance with Environmental Laws, (ii) all operations
on the Leases that require authorization under Environmental Permits are duly authorized by such Environmental Permits, and (iii)
no facts, conditions or circumstances exist in connection with, related to or associated with the Leases, the operations conducted
thereon, or the Environmental Permits, that could reasonably be expected to give rise to any claim or assertion that Seller, the
Leases or any operations thereon are not in material compliance with any Environmental Law or with any term or conditions of any
Environmental Permit;


 


(b)   
Seller has not received written notice from any Governmental Entity that any of the Leases is the subject of any remediation, removal,
cleanup, response Action, enforcement Action or Order regarding any actual or alleged presence or release of Hazardous Materials
that has not been finally resolved, and to Seller’s Knowledge: (i) none of the Leases are the subject of any investigation
regarding any actual or alleged presence or release of Hazardous Materials; and (ii) no facts, conditions, or circumstances exist
in connection with, related to or associated with the Leases or the operations conducted thereon that could reasonably be expected
to give rise to liability for Environmental Matters;


 


(c)   
There are no civil, criminal, or administrative Actions or notices pending or, to Seller’s Knowledge, threatened in
writing against Seller that are related to the Purchased Assets or the operations on the Leases under any Environmental Law,
including those related to allegations of economic loss, personal injury, illness, or damage to real or personal property or
the environment; and


 





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(d)   
All material reports, studies, written notices from Governmental Entities, tests, analyses, and other documents addressing environmental
issues related to the Lease properties or the operations conducted thereon, which are in Seller’s possession, have been made
available to Buyers.


 


3.10    
Compliance with Laws. Except as provided in Schedule 3.10, and except with respect to Environmental Laws, which are
addressed exclusively in Section 3.9, Seller has been in compliance in all material respects with, and has developed, operated
and maintained the Purchased Assets and the Equipment operated by it in compliance in all material respects with, all applicable
Laws. To Seller’s Knowledge, the Purchased Assets not operated by Seller have been developed, operated and maintained in
compliance with all applicable Laws.


 


3.11    
No Litigation. Except as provided in Schedule 3.11, no Action is in progress and no Order is pending or in effect,
or, to the Knowledge of Seller, is threatened against or relating to Seller (which could reasonably be expected to impair Seller’s
ability to perform its obligations under this Agreement) or relating to any of the Purchased Assets, or relating to the Transactions.


 


3.12    
Brokers’ Fees. Except as provided in Schedule 3.12, Seller has no liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the Transactions. Buyer shall not directly or indirectly have any responsibility,
liability or expense, as a result of undertakings or agreements of Seller or its Affiliates, for brokerage fees, finder’s
fees, agent’s commissions or other similar forms of compensation in connection with this Agreement or the Transactions.


 


3.13    
Books and Records. The Records are complete and correct in all material respects and have been maintained in accordance
with sound business practices.


 


3.14    
Bankruptcy. There are no bankruptcy, reorganization, or receivership proceedings pending against, or, to Seller’s
Knowledge, being contemplated by or threatened against Seller.


 


3.15    
AFEs and Other Commitments. Except as provided in Schedule 3.15, as of the Effective Time and as of the date of this
Agreement, there were and are no authorizations for expenditures (“AFEs”), capital expenditures related to the
drilling or reworking of wells, or other commitments for capital expenditures outstanding with respect to the Purchased Assets
in excess of $150,000 individually (net to Seller’s interest).


 


3.16     Well
Status; Plugging and Abandonment. Since the Effective Time, Seller has not abandoned, and is not in the process
of abandoning, any wells associated with the Leases (nor has it removed, nor is it in the process of removing, any material
items of personal property, except those replaced by items of substantially equivalent suitability and value). Except as
provided in Schedule 3.16, there are no wells associated with the Leases:


 


(a)   
with respect to which Seller has received an Order requiring that such well be plugged and abandoned that has not been plugged
and abandoned;


 


(b)   
that formerly produced in connection with Seller’s operations but that are currently shut in or temporarily abandoned or,
to Seller’s Knowledge, that formerly produced in connection with operations by Third Persons but that are currently shut
in or temporarily abandoned; or


 


(c)   
that have been plugged and abandoned by Seller or, to Seller’s Knowledge, by Third Persons but have not been plugged in accordance
with all applicable requirements of each Governmental Entity having jurisdiction over the well.


 


3.17    
Current Bonds. Schedule 3.17 contains a list of all surety bonds, letters of credit and other similar instruments
maintained by Seller or any of its Affiliates with respect to the Purchased Assets.


 


3.18    
Non-Consent Operations. Except as provided in Schedule 3.18, no operations are being conducted or have been conducted
with respect to the Purchased Assets as to which Seller has elected to be a nonconsenting party under the terms of the applicable
operating agreement and with respect to which Seller has not yet recovered its full participation.


 


3.19    
Consents. Except for: (a) consents or approvals of or filings with the United States Department of Interior, or applicable
Governmental Entities in connection with assignments of the Purchased Assets operated by Seller that are customarily obtained
post- closing in a purchase and sale transaction of this nature; (b) Preference Rights and Transfer Requirements set forth on
Schedule 3.19; and (c) consents, approvals, authorizations, permits, filings or notices referenced in Schedule 3.19,
no consent, approval, authorization or permit of, or filing with or notification to, any Person is required for or in connection
with the execution and delivery of this Agreement by Seller or for or in connection with consummation of the Transactions and
performance of the terms and conditions contemplated in this Agreement by Seller. Except as provided in Schedule 3.19,
there are no preferential purchase rights, rights of purchase, rights of first refusal, rights of first offer or similar rights
affecting any of the Purchased Assets.


 





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3.20    Permits. Except as set forth on Schedule 3.20, Seller possesses all material permits, licenses, orders, approvals,
variances, waivers, franchises, rights, and other authorizations, required to be obtained from any Governmental Entity for conducting
its business with respect to the Purchased Assets as presently conducted and there are no material uncured violations of the terms
and provisions of such authorizations. To Seller’s Knowledge, any Third Persons which operate any of the Purchased Assets
possess all material permits, licenses, orders, approvals, variances, waivers, franchises rights, and other authorizations, required
to be obtained from any Governmental Entity for conducting their business with respect to the Purchased Assets and there are no
material uncured violations of the terms and provisions of such authorizations. With respect to each such permit, Seller has not
received written notice from any Governmental Entity of any violations of such permits that remain uncured.


 


3.21     Payout Balances; Imbalances.

 


(a)   
Schedule 3.21(a) contains Seller’s good faith determination of the status of any “payout” balance, as
of the dates shown on Schedule 3.21(a), for each Well that is subject to a reversion or other adjustment at some level of
cost recovery or payout.


 


(b)   
Schedule 3.21(b) contains Seller’s good faith determination of all Imbalances attributable to the Purchased Assets
as of the date(s) provided in that schedule.


 


3.22     Tax Matters. Except as provided in Schedule 3.22:

 


(a)   
all Tax Returns relating to or in connection with the Purchased Assets required to be filed have been timely filed and all such
Tax Returns are correct and complete in all material respects;


 


(b)   
all Taxes relating to or in connection with the Purchased Assets that are or have become due have been timely paid in full and
Seller is not delinquent in the payment of any such Taxes (including all Property Taxes and Hydrocarbon Taxes);


 


(c)   
no extension or waiver of any statute of limitations of any jurisdiction regarding the assessment or collection of any Tax (other
than Income Taxes) of Seller relating to or in connection with the Purchased Assets is in effect;


 


(d)   
there are no administrative or judicial proceedings pending against the Purchased Assets or against Seller relating to or in connection
with the Purchased Assets by any Taxing Authority with respect to Taxes (other than Income Taxes);


 


(e)   
there are no Liens on any of the Purchased Assets that arose in connection with the failure (or alleged failure) to pay any Tax,
other than current period Property Taxes not yet delinquent; and


 


(f) Seller
is not a foreign person within the meaning of Section 1445(f) of the Code.

 


3.23    
Tax Partnership. Except as provided in Schedule 3.23, none of the Purchased Assets is held by or is subject to any
contractual arrangement between Sellers and any other Persons, whether owning undivided interests therein or otherwise, that is
treated as or constitutes a partnership for United States federal Tax purposes (a “Tax Partnership”). Any Tax
Partnership in which Buyer is purchasing a partnership interest either has in effect an election under Section 754 of the Code
or will make such an election for the taxable period that includes the Closing Date.


 


3.24    
Royalties and Suspense. Except as provided in Schedule 3.24, to Seller’s Knowledge, all Royalties, payments
due working interest owners and other payments due from or in respect of production of Hydrocarbons from the Purchased Assets have
been timely and properly paid or suspended for proper cause. The amount of suspense (if any) for each Purchased Asset is listed
in Schedule 3.24 and Seller has or will give Buyer access to its detailed suspense ledgers and files supporting each suspended
interest.


 


3.25    
No Casualty Loss. From the Effective Time to the Closing, no Wells or Equipment with an aggregate Allocated Value in excess
of $50,000 have been destroyed or otherwise impaired by Casualty nor has Seller received written notice that any Leases are subject
to condemnation or eminent domain proceedings.


 


ARTICLE IV


REPRESENTATIONS
AND WARRANTIES OF BUYER


 


Buyer represents and warrants to Seller
that:


 





4.1   
Organization and Qualification. Buyer is a corporation duly organized, validly existing and in good standing under the laws
of Nevada, with full corporate power and authority to acquire and own the Subject Interests and to conduct business in the states
in which the Subject Interests are located.


 


4.2   
Authority; Binding Effect.

 


(a)   
The execution and delivery of this Agreement by Buyer and consummation of the Transactions by it have been duly and validly authorized
by all necessary company action on the part of Buyer.


 





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(b)   
This Agreement and each agreement, instrument or document being or to be executed and delivered by Buyer in connection with the
Transactions (“Buyer Related Documents”), upon due execution and delivery by it, will constitute, assuming the
due execution and delivery by the counterparties to the Buyer Related Documents, the legal, valid, and binding obligation of Buyer,
enforceable in accordance with its respective terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws relating to or limiting creditors’ rights generally or by application of equitable principles
regardless of whether such enforceability is considered in a proceeding at Law or in equity).


 


4.3   
Governmental Entities. Buyer is not required to submit any material notice, report or other filing with any Governmental
Entity in connection with its execution or delivery of this Agreement or any of the Buyer Related Documents or consummation of
the Transactions and no consent, approval or authorization of any Governmental Entity is required to be obtained by Buyer in connection
with the execution, delivery and performance of this Agreement by it.


 


4.4   
No Conflicts. The execution, delivery and performance of this Agreement and any of the Buyer Related Documents by Buyer,
and consummation of the Transactions, do not and will not:


 


(a)   
Conflict with or result in any breach of the provisions of, or constitute a default or require the consent of any Person under
the organizational documents of Buyer;


 


(b)(i) to Buyer’s
knowledge, violate any restriction to which Buyer is subject or, with or without the giving of notice, the passage of time, or
both (ii) (or give rise to any right of termination, cancellation or acceleration under) any mortgage, deed of trust, license,
lease, indenture, contract or other material agreement or instrument, whether oral or written, to which Buyer is a party, or by
which it or any of the assets of Buyer is bound (which will not be satisfied, assigned or terminated on or prior to Closing as
a result of the Transactions), (iii) result in termination of any such instrument or termination of any provisions in such instruments,
or (iv) result in the creation or imposition of any Lien upon the properties or assets of Buyer; or


 


(c) Constitute a violation of any applicable
Law in any material respect.


 


4.5   
No Litigation. There is no Action in progress or Order, pending or in effect, or, to the Knowledge of Buyer, threatened
against or relating to Buyer which is reasonably likely to impair its ability to perform its obligations under this Agreement or
against or relating to the Transactions.


 


4.6   
Brokers’ Fees. Buyer has no liability or obligation to pay any fees or commissions to any broker, finder or agent
with respect to the Transactions. Seller shall not directly or indirectly have any responsibility, liability or expense, as a result
of undertakings or agreements of Buyer or its Affiliates, for brokerage fees, finder’s fees, agent’s commissions or
other similar forms of compensation in connection with this Agreement or the Transactions.


 


4.7   
Securities Laws. Seller is familiar with the Company and it is a knowledgeable, experienced and sophisticated investor in
the oil and gas business. Seller understands and accepts the risks and absence of liquidity inherent in ownership of the Securities.
Seller acknowledges that the Securities are deemed to be “securities” under the Securities Act of 1933, as amended,
and certain applicable state securities or Blue Sky laws and that resales thereof may therefore be subject to the registration
requirements of such acts. The Securities are being acquired solely for Buyer’s own account for the purpose of investment
and not with a view to resale, distribution or granting a participation therein in violation of any securities laws. Seller acknowledges
that it can bear the economic risk of its investment in the Securities and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of an investment in the Consideration.


 


4.8    
Restricted Securities; Restriction on Transfers.

 


(a)    
Seller understands that the Securities will not have been registered pursuant to the Securities Act of 1933, as amended or any
applicable state securities laws, that the Securities will be characterized as “restricted securities” under federal
securities laws, and that under such laws and applicable regulations the Securities cannot be sold or otherwise disposed of without
registration under the Securities Act or an exemption therefrom.


  


(b)
Buyer acknowledges that Seller intends to transfer the Warrants to its Members. Thereafter the Warrants may not be
sold, assigned, transferred, disposed of directly or indirectly for a period of one ( 1) year without the prior written
consent of the Company. In consenting to any such transfer, the Company may require such additional documents as it deems
necessary.


 


4.9     Records and Independent Evaluation.

 


(a)   
Records. Buyer is experienced and knowledgeable in the oil and gas business and is aware of its risks. Buyer acknowledges
that Seller is making available to it the Records and the opportunity to examine, to the extent it deems necessary in its sole
discretion, all real property, personal property and equipment associated with the Purchased Assets. Except for the representations
of Seller contained in this Agreement, Buyer acknowledges and agrees that Seller has not made any representations or warranties,
express or implied, written or oral, as to the accuracy or completeness of the Records or any other information relating to the
Assets furnished or to be furnished to Buyer or its representatives by or on behalf of Seller, including without limitation any
estimate with respect to the value of the Purchased Assets, estimates or any projections as to reserves and/or events that could
or could not occur, future operating expenses, future workover expenses and future cash flow.


 





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(b)   
Independent Evaluation. In entering into this Agreement, Buyer acknowledges and affirms that it has relied and will rely
solely on the terms of this Agreement and upon its independent analysis, evaluation and investigation of, and judgment with respect
to, the business, economic, legal, tax or other consequences of this Transaction including its own estimate and appraisal of the
extent and value of the petroleum, natural gas and other reserves of the Purchased Assets, the value of the Purchased Assets and
future operation, maintenance and development costs associated with the Purchased Assets. Buyer is aware of the geologic factors
and risks associated with operating oil and gas wells in the area of the Purchased Assets. Accordingly, Buyer assumes the risk
of the downhole condition of the Wells. Except as expressly provided in this Agreement, Seller shall not have any liability to
Buyer or its affiliates, agents, representatives or employees resulting from any use, authorized or unauthorized, of the Records
or other information relating to the Purchased Assets provided by or on behalf of Seller.


 


ARTICLE V


COVENANTS


 


5.1  Post-Closing
Covenants. Each of the Parties shall use its Reasonable Best Efforts to take all actions and to do all things necessary, proper
or advisable to complete and implement the Transactions, including:


 


(a)   
Each Party shall use its Reasonable Best Efforts to obtain, at its expense, all waivers, permits, consents, approvals or other
authorizations from Governmental Entities and to effect all registrations, filings and notices with or to Governmental Entities,
as may be required for such Party to consummate the Transactions and to otherwise comply with all applicable Laws in connection
with consummation of the Transactions (including those provided in Schedule 5.1, the “Governmental Approvals”).


 


(b)   
Seller shall use its Reasonable Best Efforts to obtain, at its expense, all such waivers, consents or approvals from Third Persons,
including as may be necessary to transfer the Assigned Contracts and the Leases to Buyer, and to give all such notices to Third
Persons, as are required to be listed on the schedules or as may be required for Seller to consummate the Transactions and to otherwise
comply with all applicable Laws in connection with consummation of the Transactions, including any waivers, consents or approvals
from Third Persons arising or delivered after Closing.


 


(c)   
Seller shall cooperate with Buyer in the notification of all applicable Governmental Entities of the Transactions and in obtaining
all Governmental Approvals that may be necessary for Buyer to own and operate the Purchased Assets following consummation of the
Transactions.


 


(d)     On or before July 31, 2015, Sellers shall perform the
Post-Closing Agreement set forth in Exhibit L.

 


5.2   
Expenses. Except as otherwise provided in this Agreement, each of the Parties shall bear its own costs and expenses (including
legal and accounting fees and expenses) incurred in connection with this Agreement and the Transactions; provided, however,
all Transfer Taxes shall be paid by Buyer. Seller and Buyer shall cooperate with each other in demonstrating that the requirements
for exemption, if any, from such Transfer Taxes have been met.


 


(a)   
With respect to any Purchased Assets for which Buyer delivers a notice of Environmental Defect prior to or on the Objection Date,
the Parties shall have the following rights and remedies:


 


(i)   
Seller shall have the right, but not the obligation, to cure the Environmental Defect by obtaining a “no further action”
letter or its equivalent from the relevant Governmental Entity, or if the Parties agree that no such letter or approval is likely
to be forthcoming because the provision for such “no further action” letter or its equivalent is not provided for under
applicable Environmental Laws, a certificate from a licensed professional engineer reasonably acceptable to Buyer that a cure of
the Environmental Defect has been accomplished to the extent necessary to comply with existing Laws, so long as such cure is accomplished
in accordance with this Section 5.3(c)(i) on or before 120 days following the Closing (the “Environmental Cure Period”).
After an Environmental Defect has been cured and Sellers’ Representative provides Buyer with evidence in accordance with
this Section 5.3(c)(i) that such Environmental Defect has been cured, Seller shall be released from all further liability or obligation
to Buyer with respect to such affected Purchased Asset.


 


(ii)   
Seller may notify Buyer in writing that it has elected to indemnify Buyer from all liabilities and obligations arising out of the
Environmental Defect, but only if Buyer agrees that the indemnity, in such circumstance, is an appropriate remedy, and if the Parties
can mutually agree on the form of the indemnity. If Seller later cures the Environmental Defect in accordance with Section 5.3(c)(i),
the indemnity and all further liability or obligation to Buyer with respect to the affected Purchased Asset shall terminate.


 





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(b)   
If an Environmental Defect has not been resolved under Section 5.3(c)(i) or (ii) above by the end of the Environmental Cure
Period, a Party may refer the matter to arbitration (pursuant to the procedures provided in Section 8.3(d)) for determination
of the existence of and/or the value of such Environmental Defect at the time of the arbitration (the “Environmental
Defect Value”); provided, that such arbitrator shall be an environmental attorney with at least ten years
experience in oil and gas environmental issues, shall not have worked as an employee or outside counsel for any Party or its
Affiliates during the five year period preceding the arbitration or have any financial interest in the dispute, and shall be
selected by mutual agreement of Buyer and Seller within 15 days after the end of the applicable Environmental Cure Period.
Absent such agreement, the procedures provided in Section 8.3(d) shall control. The determination of the arbitrator shall be
binding on the Parties. Within ten days following the date of the arbitrator’s decision, Sellers shall pay any
Environmental Defect Value determined by the arbitrator with respect to such affected Purchased Asset and shall be released
from any liability for the applicable Environmental Defect; provided, however, that notwithstanding anything to
the contrary in this Agreement, there shall be no cure, remedy, deletion or adjustment to the Purchase Price whatsoever in
respect of any Environmental Defects unless the aggregate value of all Environmental Defects equals or exceeds $1,000 (the
“Environmental Defect Deductible”). The amount of the reduction in Purchase Price shall be the aggregate
amount of Environmental Defect Values that exceed the Environmental Defect Deductible. Contemporaneously with any such
payment or the arbitrator’s decision that no Environmental Defect exists, Seller shall be released from all
further liability or obligation to Buyer with respect to the affected Purchased Asset.


 


5.3   
Access to
Puchased Assets and Records. Buyer shall preserve until the fifth anniversary of the Closing Date all records delivered by
Seller to Buyer relating to any of the Purchased Assets prior to the Closing Date. After the Closing Date, Buyer shall provide
Seller with access, upon prior reasonable written request specifying the need therefor, during regular business hours, to: (i)
the officers and employees of Buyer; and (ii) the books of account and records of Buyer, but, in each case, only to the extent
relating to the Purchased Assets prior to the Closing Date, and Sellers and their representatives shall have the right to make
copies of such books and records; provided, however, that the preceding right of access shall not be exercisable
in such a manner as to interfere unreasonably with the normal operations and business of Buyer.


 


5.4   
Further Assurances. After Closing, upon the terms and subject to the conditions of this Agreement, the Parties shall execute
such documents and other instruments and take such further actions as may be reasonably required to carry out the provisions of
this Agreement and consummate the Transactions.


 


5.5    Delivery
of Books and Records to Buyer. Sellers’ Representative shall, within five days after Closing, deliver the Records to
Buyer.


 


5.6
   Tax Matters.

 


(a)   
Tax Refunds. The amount of any refunds of Hydrocarbon Taxes or Property Taxes attributable under the principles of Section
1.7 to periods before the Effective Time shall be for the account of Seller. The amount of any refunds of Hydrocarbon Taxes or
Property Taxes attributable under the principles of Section 1.7 to periods after the Effective Time shall be for the account of
Buyer. Each Party shall forward to the Party entitled to receive a refund of Tax under this Section 5.6 the amount of such refund
within ten days after such refund is received.


 


(b)   
Tax Liabilities. If any Tax liability associated with the Purchased Assets should arise related to a time period before
the Effective Time, then such Tax liability shall be for the account of Sellers. Tax liabilities that arise on or after the Effective
Time shall be for the account of Buyer.


 


(c)   
Cooperation. Buyer and Seller shall cooperate fully as and to the extent reasonably requested by the other Party, in connection
with the filing of any Tax Returns and any audit, litigation or other proceeding (each, a “Tax Proceeding”)
with respect to Taxes relating to or in connection with the Purchased Assets. Such cooperation shall include the retention and
(upon the other Party’s request) the provision of such records and information which are reasonably relevant to any such
Tax Return or Tax Proceeding and making employees available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The requesting Party shall reimburse the other Party for its costs incurred in
cooperating with the requesting Party.


 


(d)    Section
1031 Exchange. Each Party agrees to cooperate with the other Party to accommodate such other Party in effectuating a like
kind exchange (an “Exchange”) under Section 1031 of the Code in connection with the purchase and sale of
the Purchased Assets, provided that: (i) Closing shall not be delayed or affected by reason of the Exchange nor shall
consummation or accomplishment of an Exchange be a condition precedent or condition subsequent to the exchanging
Party’s obligations under this Agreement and the exchanging Party’s failure or inability to consummate an
exchange for any reason or for no reason at all shall not be deemed to excuse or release the exchanging Party from its
obligations under this Agreement; (i)      the exchanging Party shall effect its Exchange through an
assignment of this Agreement, or its rights under this Agreement, to a qualified intermediary, but such assignment shall not
release the exchanging Party from any of its Liabilities to the non- exchanging Party under this Agreement or expand any
Liabilities of the non-exchanging Party under this Agreement; (iii) no Party shall be required to take an assignment of the
purchase agreement for the relinquished or replacement property or be required to acquire or hold title to any real property
for purposes of consummating an Exchange desired by the other Party; and (iv) the exchanging Party shall pay any additional
costs that would not otherwise have been incurred by the non-exchanging Party had the exchanging Party not consummated the
transaction through an Exchange and the exchanging Party shall indemnify the non-exchanging Party against any such additional
costs or liabilities. No Party shall by this Agreement or acquiescence to an Exchange desired by the other Party have its
rights under this Agreement affected or diminished in any manner or be responsible for compliance with or be deemed to have
warranted to the exchanging Party that its Exchange in fact complies with Section 1031 of the Code.


 





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5.7   
Covenants and Agreements of Buyer. Buyer covenants and agrees with Seller that at Closing or as soon as practical thereafter,
but no later than 30 days after the Closing, Buyer or its designee shall provide replacement instruments for each bond or similar
contingent obligation given by Seller securing its, or its contract operator’s, obligations relating to the Purchased Assets,
set forth on Exhibit D (collectively, the “Instruments”). As soon as practical after Closing, but no
later than 30 days after the Closing, Buyer and Seller shall use their commercially reasonable efforts to obtain the release of
the Purchased Assets and/or Seller from the Instruments and Buyer shall indemnify and hold Seller harmless for claims related to
or arising out of any failure by Buyer to obtain such releases.


 


ARTICLE VI


TITLE
MATTERS


 


6.1   
Title Information. Seller shall make all information in Seller’s or its agents’ possession regarding title to
the Purchased Assets available to Buyer in Sellers’ Representative’s offices at reasonable times during Seller’s
normal business hours.


 


6.2   
Defensible Title. “Defensible Title” means the title of Seller in and to each Lease, Well or Well Location,
subject to and except for the Permitted Encumbrances:


 


(a)   entitles Seller to receive throughout the duration of the productive life of any Lease, Well or Well Location (after satisfaction
of all royalties, overriding royalties, nonparticipating royalties, net profits interest or similar burdens on or measured by production
of Hydrocarbons) not less than the Net Revenue Interests for the Hydrocarbons and proceeds of such Hydrocarbons produced, saved
and marketed in respect of each Lease, Well or Well Location as provided in Exhibit A, B or Schedule 10, as
applicable, and, if the Net Revenue Interest for any Well or undeveloped location is listed as both “BPO” and “APO,”
not less than the BPO Net Revenue Interest prior to the applicable payout event, and not less than the APO Net Revenue Interest
after the applicable payout event;


 


(b)   obligates Seller to bear costs and expenses relating to the ownership, maintenance, repair, development, operation and production
of Hydrocarbons in respect of each Lease, Well or Well Location, in an amount not greater than the Working Interest in respect
of each Lease as provided in Exhibit A, B or Schedule 10, as applicable, except to the extent modified by
integration or non-consent adjustments in the ordinary course of business after the date of and in accordance with this Agreement
or to the extent there is a corresponding proportionate increase in Seller’s Net Revenue Interests;


 


(c)   with respect to each Lease, entitles Seller to the Net Mineral Acres provided in Exhibit A or Schedule 10, as applicable,
with respect to such Lease; and


 


(d)   is free and clear of Liens and defects.

 


6.3   
Permitted Encumbrances. “Permitted Encumbrances” shall include the following (but only to the extent
they exist and constitute a burden on the Purchased Assets as of the Effective Time):


 


(a)   
any royalties, overriding royalties, net profits interests, production payments, reversionary interests and similar burdens
on production if the individual or net cumulative effect of such burdens does not: (i) reduce the Net Revenue Interests in
respect of a Lease, a Well or a Well Location from the Net Revenue Interest specified on Exhibit A, B or Schedule
10, as applicable; (ii) increase Seller’s working interest above that shown in Exhibit A, B or Schedule
10, as applicable, without a corresponding increase in the applicable Net Revenue Interest; (iii) increase the royalty,
overriding royalty and other burdens on production for any Lease to an amount greater than that provided in Exhibit A or Schedule
10, as applicable, for such Lease; or (iv) reduce the Net Mineral Acres for any Lease to an amount less than the Net
Mineral Acres provided in Exhibit A or Schedule 10, as applicable, for such Lease;


 


(b)   
Liens for Taxes not yet due and payable or, if delinquent, that are being contested in good faith and credit is provided to the
appropriate Party pursuant to Section 5.6(b) in the Final Adjustment Statement;


 


(c)   
rights to consent by, notices to, filings with or actions by federal, state, local or tribal authorities in connection with the
conveyance of the Purchased Assets if customarily obtained after a conveyance is made;


 


(d)   
obligations to reassign upon final intention to abandon or release the Purchased Assets, or any of them;

 


(e)   
easements, rights of way, servitudes, permits, surface leases and other rights with respect to the surface or any restrictions
on access to the surface or subsurface that are of a nature customarily accepted by a prudent owner or operator of oil and gas
properties and that do not materially interfere with the ownership, use, maintenance or operation of the Purchased Assets as currently
owned or operated;


 





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(f)   
any encumbrance, title defect or other matter (whether or not constituting a Title Defect) waived in writing by Buyer or not raised
by Buyer on or prior to the Objection Date (other than matters covered by Seller’s special warranty of title contained in
the Assignment, Bill of Sale and Conveyance);


 


(g)   
division orders, transfer orders, letters in lieu of transfer orders and pooling or unitization orders, declarations or agreements
applicable to the Purchased Assets if the individual or net cumulative effect of such does not: (i) reduce the Net Revenue Interest
from those specified on Exhibit A, B or Schedule 10, as applicable; (ii) increase Seller’s working interest
above that shown in Exhibit A, B or Schedule 10, as applicable, without a corresponding increase in the applicable
Net Revenue Interest; (iii) increase the royalty, overriding royalty and other burdens on production for any Lease to an amount
greater than that provided in Exhibit A or Schedule 10, as applicable, for such Lease; or (iv) reduce the Net Mineral
Acres for any Lease to an amount less than the Net Mineral Acres provided in Exhibit A or Schedule 10, as applicable,
for such Lease;


 


(h)   
materialmen’s, mechanics’, repairmen’s, contractors’, or other similar Liens or charges if the amount owed
is not yet due and payable or, if delinquent, that are being contested in good faith;


 


(i)   
rights reserved to or vested in any Governmental Entity to control or regulate any of the Purchased Assets in any manner and all
applicable Laws of general applicability in the area;


 


(j)    
Liens arising under operating agreements, unitization and pooling agreements and production sales contracts securing amounts not
yet due and payable or, if delinquent, that are being contested in good faith;


 


(k)   
calls on or preferential rights to purchase production held by Third Persons to purchase production for a price at or above market
price, as disclosed on Schedule 6.3(k);


 


(l)   
the terms and conditions of all Material Contracts to the extent such do not decrease the Net Revenue Interest for the affected
Purchased Asset or increase the Working Interest for such Purchased Asset without a corresponding proportionate increase in the
Net Revenue Interest for such Purchased Asset; and


 


(m)   
all liens, charges, encumbrances, Material Contracts, obligations, defects, irregularities and other matters affecting any Purchased
Asset which individually or in the aggregate are not such as to interfere materially with the operation, value of use of such Purchased
Asset and do not decrease the Net Revenue Interest for the affected Purchased Asset or increase the Working Interest for such Purchased
Asset without a corresponding proportionate increase in the Net Revenue Interest for such Purchased Asset.


 


6.4    Title
Defect. “Title Defect” means any encumbrance, defect in or objection to real property title,
excluding Permitted Encumbrances, which renders Seller’s title less than Defensible Title; provided that each
Title Defect must be equal to or greater than $25,000 in value net to Sellers’ interest; provided that (i) if
such Title Defect arises from the failure to satisfy any Transfer Requirements, then such threshold shall not apply and (ii)
if the same Title Defect affects multiple Wells or Leases, then the amount of the Title Defect for each affected Well or
Lease shall be aggregated for the purposes of determining whether such threshold has been satisfied. Notwithstanding the
preceding, the following shall not (in and of themselves) constitute Title Defects:


 


(a)   
defects in the chain of title consisting of the failure to recite marital status or omissions of successors or heirship proceedings,
unless Buyer provides affirmative evidence that such failure or omission could reasonably be expected to result in a Third Person’s
actual and superior claim of title to the Purchased Asset;


 


(b)   
defects asserting a change in Net Revenue Interests or Working Interests based on an after-payout decrease in Net Revenue Interests
or increase in Working Interests under a farm-in, farm-out or other agreement that is listed on Schedule 6.4(b),
if the effect of such change is reflected in the Net Revenue Interests and Working Interests provided in Exhibit A, B
or Schedule 10, as applicable; expected to result in a Third Person’s actual and superior claim of title to the
Purchased Asset;


 


(c)    
irregularities arising out of the lack of recorded powers of attorney from corporations or lack of evidence of corporate authority
to execute and deliver documents on their behalf or variation in corporate or entity name;


 


(d)   

defects based solely on a lack of information in Sellers’ files;

 


(e)   
defects in the chain of title more than fifty (50) years in the past, unless Buyers provide reasonable written evidence that such
failure or omission has resulted in another party claiming title to the relevant lease or asset;


 


(f)   

 the Minimum Royalty Litigation set forth on Schedule 3.11;

 


(g)   
any provisions contained in the Leases, to the extent the provision does not reduce the Working Interest or Net Revenue Interest
represented by Sellers;


 


(h)   

defects in acknowledgements;

 


(i)    

defects or irregularities arising out of prior unreleased oil and gas leases whose primary terms expired more than ten (10)
years prior to the Closing, absent any proof of oil or gas production extending beyond the primary term;


 


 (j)   

defects or irregularities arising out of the lack of a survey; and


 


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(k)   
outstanding deed of trust and mortgage liens burdening the interests of any lessor under any of the Leases, unless there is evidence
that the mortgagee or lien holder has asserted a default under any such deed of trust or mortgage and has exercised, or intends
to exercise, foreclosure proceedings.


 


6.5     Title Defect Value. “Title Defect Value” means the value of the Title Defect determined in accordance
with the following:

 


(a)   
if Buyer and Seller agree in writing on the Title Defect Value, that amount shall be the Title Defect Value;


 


(b)   
if the Title Defect is a discrepancy between the Net Revenue Interests in respect of the Lease and the Net Revenue Interests for
such Lease listed on Exhibit A or Schedule 10, as applicable, the Title Defect Value shall be equal to the Allocated
Value of the Lease multiplied by a fraction the numerator of which is the positive difference between the actual Net Revenue Interest
of Seller in the Lease and the Net Revenue Interest provided for such Lease on Exhibit A or Schedule 10, as applicable,
and the denominator of which is the Net Revenue Interest provided for such Lease on Exhibit A or Schedule 10, as
applicable;


 


(c)
if the Title Defect is a Lien other than a Permitted Encumbrance, the cost of removing the Lien;

 


(d)   
if the Title Defect is the increase in the Working Interests in respect of the Lease to the extent such increase is not accompanied
by a corresponding increase in the Net Revenue Interests, the Title Defect Value shall be determined by Buyer in good faith in
its reasonable discretion; and


 


(e)   
if the Title Defect is a discrepancy between the actual Net Mineral Acres for any Lease and the Net Mineral Acres for such Lease
stated in Exhibit A or Schedule 10, as applicable, then the Title Defect Value shall be the product obtained by multiplying
the Allocated Value of the Lease by a fraction the numerator of which shall be the positive difference, if any, between the Net
Mineral Acres for such Lease stated on Exhibit A or Schedule 10, as applicable, and the actual Net Mineral Acres
for such Lease and the denominator of which shall be the Net Mineral Acres for such Lease stated on Exhibit A or Schedule
10, as applicable.


 


Only that portion of the Lease that
is adversely affected by a Title Defect shall be considered for purposes of determining the Title Defect Value. For the avoidance
of doubt, if a Title Defect affects a Well and/or Well Location and an underlying Lease or Leases, the Title Defect Value shall
be determined by adding the effect of the Title Defect on the Well or Well Location to the effect of the Title Defect on the underlying
Lease or Leases, and this shall not be deemed to be duplication of values. The Allocated Values of the Wells and Well Locations
have been determined on the basis that a separate valuation is provided for the underlying Net Mineral Acres of Leases.


 


6.6   
Title Defect Notice. Buyer shall give Seller notice of any Title Defects (“Title Defect Notice”) no later
than the Objection Date. If Buyer becomes aware of any Title Defect prior to the Objection Date, Buyer may, but are not required
to, provide a Title Defect Notice with respect to such Title Defect prior to the Objection Date, and Buyer may provide one or more
Title Defect Notices on or prior to the Objection Date. Each Title Defect Notice must be in writing and include all of the following:


 


(a)   
a description of the Title Defect in reasonable detail;


 


(b)   
supporting documentation in Buyer’s possession, if any, reasonably necessary to support Buyer’s belief that the Title
Defect has not been released or cured and is still enforceable;


 


(c)   
the identity and the Allocated Value, if any, of the Lease, Well and/or Well Location, as applicable, containing the Title Defect;
and


 


(d)   
the amount by which Buyer reasonably believe the Allocated Value of such Purchased Assets is reduced by the alleged Title Defects.


 


6.7   
Accepted Title Liabilities. Any Title Defect Notice that is not properly given pursuant to Section 6.6, shall not be a valid
Title Defect Notice, and any Title Defects not included in a valid Title Defect Notice delivered on or prior to the Objection Date
shall be deemed to be “Accepted Title Liabilities” and shall be deemed to have been waived by Buyer.


 


6.8    Seller’s Cure Right; Adjustments to Purchase Price.

 


(a)   
If Buyer gives a Title Defect Notice, Seller shall have the right, but not the obligation, to attempt, at Seller’s sole cost,
to cure within 90 days after the Objection Date or the date of resolution of a disputed Title Defect under Section 6.9 (the “Title
Cure Period”), to Buyer’s reasonable satisfaction, any alleged Title Defects for which a Title Defect Notice
has been delivered under Section 6.6 on or prior to the Objection Date.


 


(b)   
With respect to each Purchased Asset affected by Title Defects for which a Title Defect Notice has been delivered by Buyer under
Section 6.6 on or prior to the Objection Date and not cured during the Title Cure Period to Buyer’s reasonable satisfaction,
subject to Section 6.9 and 6.10, the Purchase Price shall be reduced by an amount equal to the Title Defect Value for such Purchased
Asset.


 





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(c)   
Section 6.9 shall, to the fullest extent permitted by applicable Laws, be the exclusive right and remedy of Buyer with
respect to any Title Defect, except in connection with Buyer’s remedies for any breach of Seller’s covenants
under Section 8.1(b).


 


6.9   
Disputes Relating to Title Defect Value. Seller (acting through Sellers’ Representative) and Buyer shall attempt to
agree on the effect of any efforts of Seller to cure any Title Defects and all Title Defect Values on or before 120 days after
the Objection Date. Any Title Defects and Title Defect Values in dispute and not resolved by such date shall be submitted to a
title attorney with at least three years’ experience in oil and gas titles in Texas as selected by mutual agreement of Buyer
and Seller (acting through Sellers’ Representative), or absent such agreement within a ten-day period following the date
that is 120 days after the Objection Date, by the Dallas, Texas office of the AAA (the “Title Arbitrator”).
The Title Arbitrator shall not have worked as an employee or outside counsel for any Party or it’s Affiliates during the
five (5) year period preceding the arbitration or have any financial interest in the dispute. The arbitration proceeding shall
be held in Dallas, Texas and shall be conducted in accordance with the Commercial Rules, to the extent such rules do not conflict
with the terms of this Section. The Title Arbitrator’s determination shall be made within 30 days after submission of the
matters in dispute and shall be final and binding on all Parties, without right of appeal. In making his or her determination,
the Title Arbitrator shall be bound by the rules provided in Section 6.5 and may consider such other matters as in the opinion
of the Title Arbitrator are necessary or helpful to make a proper determination. Additionally, the Title Arbitrator may consult
with and engage disinterested Third Persons to advise the Title Arbitrator, including title attorneys from other states and petroleum
engineers. The Title Arbitrator shall act as an expert for the limited purpose of determining the specific disputed Title Defects
and Title Defect Values submitted by any Party and may not award damages, interest or penalties to any Party with respect to any
matter. Each Party shall bear such Party’s own legal fees and other costs of presenting such Party’s case. Buyer and
Seller shall bear the costs and expenses of the Title Arbitrator in equal parts.


 


6.10   
Adjustment to Purchase Price; Title Defect Deductible.

 


(a)   
The Purchase Price shall be adjusted for Title Defect Values as provided in Section 6.8(b); provided, however,
that notwithstanding anything to the contrary in this Agreement, there shall be no cure, remedy, deletion or adjustment to
the Purchase Price whatsoever in respect of any Title Defects unless the aggregate value of all Title Defects equals or
exceeds $50,000 (the “Title Defect Deductible”) and in such event the reduction in the Purchase Price
shall be the aggregate amount of Title Defect Values that exceed the Title Defect Deductible, unless such Title Defect arises
from the failure to satisfy any Transfer Requirements, in which case the Title Defect Deductible shall not apply.


 


(b)   
Upon final resolution of all disputes as to the validity and amounts of Title Defects in accordance with Section 6.9, if: (i)   
the Final Adjustment Statement has not then become final, the Title Defect Value this Article VI shall be used for purposes
of the Final Adjustment Statement and calculation of the Purchase Price for purposes of Section 1.9; or (ii) the Final
Adjustment Statement has become final then within three Business Days after the final determination of any reduction in the
Purchase Price for Title Defects, Seller will pay to Buyer the amount of such reduction.


 


6.11    
Preference Rights and Transfer Requirements.


 


(a)   
The Transactions are expressly subject to all validly existing and applicable Preference Rights and Transfer Requirements. Within
ten days after the date of this Agreement, Seller shall, subject to Buyer’s prior review of Seller’s consent request
letters and Preference Right waiver request letters, initiate all procedures which are reasonably required to comply with or obtain
the waiver of all Preference Rights and Transfer Requirements with respect to the Transactions. Seller shall use its Reasonable
Best Efforts to obtain all applicable consents and to obtain waivers of applicable Preference Rights.


 


(b)   
Upon the exercise of any Preference Right after the Closing with respect to any Purchased Asset conveyed to Buyer, Buyer shall
tender the required interest in such Purchased Asset affected by such Preference Right, at the Allocated Value for such affected
Purchased Asset (or portion thereof) to the holder, or holders, of such right. In return for tendering the Purchased Asset to such
holders, Buyer shall collect and retain such amount from such purchaser as its sole and exclusive remedy for such exercise of a
Preferential Right. At Closing, Seller will assign to Buyer the Purchased Asset, including any Purchased Asset that is subject
to an unexercised Preference Right, subject to such right to purchase.


 


6.12     Upward
Defect Adjustments. If Buyer or Seller discover additional interests in the Purchased Assets, including any Net Mineral
Acres in excess of the Net Mineral Acres set forth in Exhibit A or Schedule 10 or any interest that
entitles Seller to receive more than the Net Revenue Interests set forth in Exhibit A, Exhibit B or Schedule
10 or obligates Seller to bear costs and expenses in an amount less than the Working Interests set forth in Exhibit
A, Exhibit B or Schedule 10 without a corresponding reduction in Seller’s Net Revenue Interest, the
discovering party shall notify the other party of such interest (the “Additional Interest”). The party who
discovers the Additional Interest shall give the other party written notice of the Additional Interest as soon as possible,
but in no event later than the Objection Date. This notice shall be in writing and shall include (i) a description of each
Additional Interest, (ii)    the basis for each Additional Interest and supporting documentation with respect
thereto, (iii) the Allocated Value of the Lease, Well or undeveloped location affected by the Additional Interest, (iv) the
value of the Additional Interest or the amount by which the notifying party believes the Allocated Value of the Lease, Well
or undeveloped location has been increased by the Additional Interest and the computations upon which such party’s
belief is based, which amount must be equal to or greater than $25,000 net to Sellers’ interest. The Purchase Price
shall not be adjusted for value of any Addition Interest until the aggregate value of all Additional Interests equals or
exceeds the Title Defect Deductible and in such event the increase in the Purchase Price shall be the aggregate amount of
Additional Interests that exceed the Title Defect Deductible.


 





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6.13    No
Title Representation or Warranty. Except for the special warranty of title by, through and under Seller that will be contained
in the Assignment, Bill of Sale and Conveyance to be delivered at Closing and without limiting Buyer’s right to adjust the
Purchase Price as provided in this Article VI, Sellers make no warranty or representation, express or implied, statutory or otherwise,
with respect to Sellers’ title to any of the Purchased Assets and Buyer hereby acknowledges and agrees that Buyer’s
sole and exclusive remedy for any defect of title, including any Title Defect, with respect to any of the Purchased Assets shall
be pursuant to the procedures and as set forth in Article VI.


 


Article VII.


ARTICLE VII RESERVED


 


ARTICLE VIII 

INDEMNIFICATION


 


8.1     Indemnification by Seller. From and after Closing, Seller shall indemnify Buyer, Buyer’s permitted assigns and Affiliates
and their respective partners, directors, members, shareholders, officers, employees and agents (collectively, “Buyer
Indemnified Persons”) from and against the entirety of any Damages the Buyer Indemnified Persons may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the following:


 


(a)   
any breach by Seller of any of Seller’s representations and warranties in this Agreement (without giving effect to any supplement
to the disclosure schedules to this Agreement) or in the Seller Related Documents;


 


(b)   
any breach by Seller of any of its covenants in this Agreement or in the Seller Related Documents;

 


(c)   
any Excluded Liabilities; and

 


(d)   
the litigation described in Schedule 3.11.


 


THE FOREGOING INDEMNIFICATIONS BY
SELLERS SHALL APPLY WHETHER OR NOT DAMAGES ARISE OUT OF (i)    NEGLIGENCE (INCLUDING SOLE NEGLIGENCE, SIMPLE
NEGLIGENCE, CONCURRENT NEGLIGENCE, ACTIVE OR PASSIVE NEGLIGENCE, BUT EXPRESSLY NOT INCLUDING GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT) OF ANY INDEMNITEE, OR (ii) STRICT LIABILITY.


 


8.2   
Indemnification by Buyer. From and after Closing, Buyer shall indemnify Seller, Seller’s permitted assigns and Affiliates
and their respective partners, directors, members, shareholders, officers, employees and agents (the “Seller Indemnified
Persons”) from and against the entirety of any Damages the Seller Indemnified Persons may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the following:


 


(a)   
any breach by Buyer of any of its representations and warranties in this Agreement or in the Buyer Related Documents;


 


(b)   any breach by Buyer of any of its covenants in this Agreement or in the Buyer Related Documents; and

 


(c)   any Assumed Liabilities.


 

THE FOREGOING INDEMNIFICATIONS BY
BUYER SHALL APPLY WHETHER OR NOT SUCH DAMAGES ARISE OUT OF (i) NEGLIGENCE (INCLUDING SOLE NEGLIGENCE, SIMPLE NEGLIGENCE,
CONCURRENT NEGLIGENCE, ACTIVE OR PASSIVE NEGLIGENCE (INCLUDING ANY VIOLATION OF APPLICABLE ENVIRONMENTAL LAWS), BUT EXPRESSLY
NOT INCLUDING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF ANY INDEMNITEE, OR (ii)
STRICT LIABILITY.

 


8.3     Indemnification Claims.

 


(a)    Third Person Claims.


 

(i)   
If any Third Person notifies any Indemnified Person with respect to any matter (a “Third Person Claim”)
that may give rise to a claim for indemnification against an Indemnifying Party under Section 8.1 or Section 8.2, then the
Indemnified Person shall promptly give written notification to the Indemnifying Party of this Agreement. Such notification
shall be given within 30 days after receipt by the Indemnified Person of notice of such Third Person Claim, and shall
describe in reasonable detail (to the extent known by the Indemnified Person) the facts constituting the basis for such Third
Person Claim and the amount of the claimed Damages (if available); provided, however, that no delay or failure
on the part of the Indemnified Person in so notifying the Indemnifying Party shall relieve the Indemnifying Party of any
liability or obligation hereunder except to the extent such delay or failure results in insufficient time being available to
permit the Indemnifying Party to effectively defend against the Third Person Claim or otherwise prejudices the Indemnifying
Party’s ability to defend against the Third Person Claim.


 





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(ii)   
The Indemnifying Party may, upon written notice to the Indemnified Person, assume control of the defense of such Third
Person Claim with counsel reasonably satisfactory to the Indemnified Person; provided that (a) the Indemnifying Party
notifies the Indemnified Person in writing within 30 days after the Indemnified Person has given notice of the Third Person
Claim that the Indemnifying Party will indemnify the Indemnified Person from and against the Damages the Indemnified Person
may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Person Claim (subject to the
provisions of this Article VIII); (b) the ad damnum, if any, is less than or equal to the amount of Damages for which the
Indemnifying Party is liable under this Article VIII; (c) the Indemnifying Party provides the Indemnified Person with
evidence acceptable to the Indemnified Person that the Indemnifying Party will have the financial resources to defend against
the Third Person Claim and fulfill its indemnification obligations hereunder; (d) the Third Person Claim does not involve
criminal liability and seeks only money damages and not equitable relief against the Indemnified Person; (e) settlement of,
or an adverse judgment with respect to, the Third Person Claim is not, in the good faith judgment of the Indemnified Person,
likely to establish a precedential custom or practice adverse to the continuing business interests or the reputation of the
Indemnified Person, and (f) the Indemnifying Party conducts the defense of the Third Person Claim actively and
diligently.


 


(iii)    
If the Indemnifying Party does not, or is not permitted under the terms of this Agreement to, so assume control of the defense
of a Third Person Claim, the Indemnified Person shall control such defense.


 


(iv)    
The Non-controlling Party may participate in such defense at its own expense. The Controlling Party shall keep the
Non-controlling Party advised of the status and defense of such Third Person Claim and shall consider in good faith
recommendations made by the Non-controlling Party with respect thereto. The Non-controlling Party shall furnish the
Controlling Party with such information as it may have with respect to such Third Person Claim (including copies of any
summons, complaint or other pleading which may have been served on such party and any written claim, demand, invoice, billing
or other document evidencing or asserting the same) and shall otherwise cooperate with and assist the Controlling Party in
the defense of such Third Person Claim. The reasonable fees and expenses of counsel to the Indemnified Person with respect to
a Third Person Claim shall be considered Damages for purposes of this Agreement if: (x) the Indemnified Person controls the
defense of such Third Person Claim under the terms of this Section 8.3; or (y) the Indemnifying Party assumes control of such
defense and the Indemnified Person reasonably concludes that the Indemnifying Party and the Indemnified Person have
conflicting interests or different defenses available with respect to such Third Person Claim.


 


(v) The Indemnifying
Party shall not agree to any settlement of, or the entry of any judgment arising from, any Third Person Claim without the prior
written consent of the Indemnified Person, which shall not be unreasonably withheld or delayed; provided that the consent of the
Indemnified Person shall not be required if the Indemnifying Party agrees in writing to pay any amounts payable under such settlement
or judgment and such settlement or judgment includes a complete release of the Indemnified Person from further liability and has
no other adverse effect on the Indemnified Person. The Indemnified Person shall send the Indemnifying Party at least ten days prior
notice of any settlement of the Third Person Claim that it proposes to enter into, and if the Indemnifying Party has not yet assumed
the defense of the Third Person Claim that is capable of being assumed under the terms of Section 8.3(a)(ii), the Indemnifying
Party may admit in writing its obligation to provide indemnity as described in Section 8.3(a)(ii)(a), assume the defense, and reject
the proposed settlement. If the Indemnifying Party has assumed the defense of the Third Person Claim or the initial 30-day period
in which the Indemnifying Party may elect to assume the defense has not yet run, the Indemnified Person shall not agree to any
settlement of, or the entry of any judgment arising from, any such Third Person Claim without the prior written consent of the
Indemnifying Party, which shall not be unreasonably withheld or delayed.


 


(b)   
Within twenty 20 days after delivery of the notification of a Third Person Claim as provided in Section 8.3(a)(i) (a
“Claim Notice”), the Indemnifying Party shall deliver to the Indemnified Person a response, in which the
Indemnifying Party shall: (i) agree that the Indemnified Person is entitled to receive all of the Claimed Amount (in which
case the Response shall be accompanied by a payment by the Indemnifying Party to the Indemnified Person of the Claimed Amount
to the extent the Claimed Amount may be finally determined at that time, by check or by wire transfer (provided that to the
extent the Claimed Amount may not be finally determined at that time, the Indemnifying Party shall pay the Indemnified Person
such additional amounts as to constitute the full Claimed Amount at such time as the full Claimed Amount can be finally
determined); (ii) agree that the Indemnified Person is entitled to receive the Agreed Amount (in which case the Response
shall be accompanied by a payment by the Indemnifying Party to the Indemnified Person of the Agreed Amount, by check or by
wire transfer); or (iii) dispute that the Indemnified Person is entitled to receive any of the Claimed Amount.


 


(c)   
During the 30-day period following the delivery of a Response that reflects a Dispute, the Indemnifying Party and the
Indemnified Person shall use good faith efforts to resolve the Dispute. If the Dispute is not resolved within such thirty
(30)-day period, the Indemnifying Party and the Indemnified Person shall discuss in good faith the submission of the Dispute
to binding arbitration, and if the Indemnifying Party and the Indemnified Person agree in writing to submit the Dispute to
such arbitration, then the provisions of Section 8.3(d) shall become effective with respect to such Dispute. The provisions
of this Section 8.3(c) shall not obligate the Indemnifying Party and the Indemnified Person to submit to arbitration or any
other alternative dispute resolution procedure with respect to any Dispute, and in the absence of an agreement by the
Indemnifying Party and the Indemnified Person to arbitrate a Dispute, such Dispute shall be resolved in a state or federal
court sitting in Dallas, Texas, in accordance with Section 11.15.


 





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(d)   
If, as provided in Section 8.3(c), the Indemnified Person and the Indemnifying Party agree to submit any Dispute to binding arbitration,
the arbitration shall be conducted by a single arbitrator (the “Arbitrator”) in accordance with the Commercial
Rules in effect from time to time and the following provisions:


 


(i)     In the event of any conflict between the Commercial Rules in effect from time to time and the provisions of this Agreement, the
provisions of this Agreement shall prevail and be controlling.


 


(ii)    The Parties shall commence the arbitration by jointly filing a written submission with the Dallas, Texas office of the AAA in accordance
with Commercial Rule 5 (or any successor provision).


 


(iii)   No depositions or other discovery shall be conducted in connection with the arbitration.

 


(iv)   Not later than 30 days after the conclusion of the arbitration hearing, the Arbitrator shall prepare and distribute to the Parties
a writing setting forth the arbitral award and the Arbitrator’s reasons therefor. Any award rendered by the Arbitrator shall
be final, conclusive and binding upon the Parties, and judgment thereon may be entered and enforced in any court of competent
jurisdiction (subject to Section 11.15).


 


(v)   The Arbitrator shall have no power or authority, under the Commercial Rules or otherwise; to (a) modify or disregard any provision
of this Agreement, including the provisions of this Section 8.3(d); or (b) address or resolve any issue not submitted by the Parties.


 


(vi)  In connection with any arbitration proceeding under this Agreement, each party shall bear its own costs and expenses, except that
the fees and costs of the AAA and the Arbitrator, the costs and expenses of obtaining the facility where the arbitration hearing
is held, and such other costs and expenses as the Arbitrator may determine to be directly related to the conduct of the arbitration
and appropriately borne jointly by the Parties (which shall not include any Party’s attorneys’ fees or costs, witness
fees (if any), costs of investigation and similar expenses) shall be shared equally by the Indemnified Person and the Indemnifying
Party.


 


(e)   
Notwithstanding the other provisions of this Section 8.3, if a Third Person asserts (other than by means of a lawsuit) that an
Indemnified Person is liable to such Third Person for a monetary or other obligation which may constitute or result in Damages
for which such Indemnified Person may be entitled to indemnification under this Article VIII, and such Indemnified Person reasonably
determines that it has a valid business reason to fulfill such obligation, then: (i) such Indemnified Person shall be entitled
to satisfy such obligation, without prior notice to or consent from the Indemnifying Party; (ii) such Indemnified Person may subsequently
make a claim for indemnification in accordance with, and subject to the limitations provided in, this Article VIII; and (iii) such
Indemnified Person shall be reimbursed, in accordance with the provisions of this Article VIII, for any such Damages for which
it is entitled to indemnification under this Article VIII (subject to the right of the Indemnifying Party to dispute the Indemnified
Person’s entitlement to indemnification, or the amount for which it is entitled to indemnification, under the terms of this
Article VIII).


 


(f)   
The rights to indemnification provided in this Article VIII shall not be affected by: (i) any investigation conducted by or on
behalf of an Indemnified Person or any knowledge acquired (or capable of being acquired) by an Indemnified Person, whether before
or after the Closing Date, with respect to the inaccuracy or noncompliance with any representation, warranty, covenant or obligation
which is the subject of indemnification hereunder; or (ii) any waiver by an Indemnified Person of any closing condition relating
to the accuracy of representations and warranties or the performance of or compliance with agreements and covenants.


 


(g)   
This Article VIII shall not apply to any indemnification obligations of Seller for Environmental Defects that Seller and Buyer
agree to under Section 5.3(c)(ii) and such indemnity obligation shall not be limited in any manner by this Article VIII.


 


(h)   
Notwithstanding anything to the contrary in this Agreement, for purposes of determining if there has been a breach of any representation
or warranty hereunder by Seller or Buyer for purposes of this Article VIII and determining the amount of any Damages that are the
subject matter of a claim for indemnification hereunder, each representation and warranty in this Agreement and each certificate
or document delivered under this Agreement shall be read without regard and without giving effect to the term(s) “material”
or “substantial” or any other materiality or similar qualification in such representation and warranty or certificate;
provided, however, the term “Material Contract” shall be given effect.


 


(i)   
Notwithstanding anything to the contrary in this Agreement, nothing in Section 8.4 or this Section 8.3 shall in any way limit
any Party’s Liability or obligations with respect to any Purchase Price Adjustments or any other covenants or agreements
in Sections 1.4 through 1.12, or Article VI.


 





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8.4    Survival
of Representations, Warranties and Covenants. All representations and warranties of the Parties in this Agreement shall
survive Closing and any investigation made by or on behalf of any Party until the close of business on the first
anniversary of the Closing Date; provided, however, that: (i) the representations and warranties provided in Section
3.22 (Tax Matters) and Section 3.23 (Tax Partnership) shall survive until the later of (A) 60 days after expiration of the
applicable statute of limitations for the applicable underlying claim, including any extensions or waivers of the applicable
statute of limitations and (B) if no applicable statute of limitations exists, then five (5) years from the Closing Date; and
(ii) the representations and warranties in Section 3.1 (Organization and Qualification) and Section 3.2 (Authority; Binding
Effect) of this Agreement, fraud and intentional misrepresentation shall survive indefinitely. All covenants of Sellers or
Buyer contained in this Agreement shall survive Closing except for (a) any covenant which by its terms terminates as of a
specific date, or is only made for a specified period, and (b) the covenants set forth in Section 8.1, which shall only
survive until the close of business on the first anniversary of the Closing Date, provided that the indemnification in
Section 8.1(c) and Section 8.1(d) shall survive without time limit and to the extent any representation or warranty survives
for a longer period of time, the indemnification for such representation and warranty shall survive for such period of time
(the “Survival Period”). A written claim for indemnification under this Article VIII for breach of a
representation or warranty may be brought at any time during the Survival Period; provided, that the representation or
warranty on which such claim is based continues to survive under this Section 8.4 at the time notice of such claim is given
in accordance with Section 8.3, and if such written notice is given within such period, all rights to indemnification with
respect to such claim shall continue in force and effect.


 


8.5   
Limitations. No Party shall have any obligation to indemnify an Indemnified Persons from and against any Damage under Section
8.1, other than Damages resulting by reason of any fraud, intentional misrepresentation, Excluded Liabilities or Assumed Liabilities,
unless (i) any individual Damage suffered by such Indemnified Person is greater than or equal to $1,000 in value (the “Individual
Deductible”) and (ii) the aggregate value of all Damages suffered by such Indemnified Person in excess of the Individual
Deductible exceeds $50,000 (the “Aggregate Deductible”) in which event such Indemnified Person may recover all Damages
incurred in excess of the Aggregate Deductible. Other than with respect to any Excluded Liabilities, in no event shall the aggregate
liability of any Seller to Buyer arising from or related to this Agreement, including without limitation any breach of any representation,
warranty, covenant or indemnity by it contained in this Agreement, exceed such Seller’s proportionate share (as determined
based on the percentage of ownership of each in the Properties) of an amount equal to $50,000.


 


8.6   
Treatment of Indemnification Payments. The Parties agree to treat all indemnification payments made under this Article VIII
(including payments under Sections 8.1 and 8.2) as adjustments to the Purchase Price for all income Tax purposes and to take no
position contrary thereto in any Tax Return or audit or examination by, or proceeding before, any taxing authority, except as required
by a change in Law or a “determination” as defined in Section 1313 of the Code and the Treasury Regulations thereunder.


  


ARTICLE IX


RESERVED


 


ARTICLE X


DEFINITIONS


 


For purposes of this Agreement, each
of the following terms shall have the meaning provided below. “Action” means an action, suit or proceeding,
claim, notice of violation, arbitration, litigation or investigation.


 


“AAA” means the American
Arbitration Association.


  


“AFEs” is defined
in Section 3.15.


 


“Accepted Title Liabilities”
is defined in Section 6.7.


 


“Additional Interests”
is defined in Section 6.12.


 


“Additional
Properties” mean those Leases within the area reflected on the map attached hereto as Exhibit E and listed on
Schedule 10.


 


“Adjustment Statement”
is defined in Section 1.8(a).


 


“Affiliate” means
any affiliate, as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended.


 


“Agreed Amount” means
part, but not all, of the Claimed Amount.


 


“Agreement” means
this Asset Purchase Agreement.


 


“Allocated
Value” or “Allocated Values” is defined in Section 1.5.


 





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“Arbitrator” is defined
in Section 8.3(d).


 


“Assessment” is defined
in Section 5.3(b).


 


“Assigned Contract”
or “Assigned Contracts” is defined in Section 1.1(c).


 


“Assumed
Environmental Liabilities” means all Losses relating to Environmental Matters in, on, under or relating to the Purchased
Assets attributable to the period of time before, on, and after the Effective Time other than Losses associated with Environmental
Defects which Sellers’ are obligated to bear pursuant to Section 5.3.


 


“Assumed
Liabilities” means:


 


(a)   
all Operating Expenses of Seller to the extent attributable to the Purchased Assets and related to periods after the Effective
Time;


 


(b)   
all other Liabilities of Seller (other than Operating Expenses) under or associated with or appurtenant to the Assigned Contracts
and the Leases, to the extent related to periods after the Effective Time;


 


(c)    
all Liabilities arising out of Buyer’s operations and/or ownership of the Purchased Assets after the Effective Time;


 


(d)    
the Assumed Environmental Liabilities;


 


(e)    all Liabilities for transfer, sales, use and similar Taxes
arising in connection with consummation of the Transactions; provided that Assumed Liabilities shall not include: (i) any Liability
resulting from any breach or non-fulfillment of any representation, warranty, covenant or agreement of Seller under this Agreement,
(ii) any Operating Expense or other Liability to the extent accounted for as an increase in the Base Purchase Price in accordance
with Section 1.6(a)(i), (iii) any Liability to the extent arising out of or attributable to the ownership, use, construction,
maintenance or operation of the Excluded Assets, (iv) all Liabilities which are payable by Seller or any Affiliate of Seller in
its capacity as operator with respect to Operated Properties to the extent the proceeds therefor have been received by Seller
or any Affiliate of Seller as of Closing but are not delivered to Buyer at Closing or (v) Seller Taxes, each of which subclauses
(i) through (v) shall be deemed an Excluded Liability; and


 


(f)    
Liabilities associated with any Minimum Royalty Litigation and any other Action or Order set forth in Schedule 3.11.


 


“Base
Purchase Price” is defined in Section 1.4.


 


“Business
Day” means any day that a Federal Reserve Bank is open for business.


 


“Buyer”
is defined in the first paragraph of this Agreement.


 


“Buyer
Indemnified Persons” is defined in Section 8.1.


 


“Buyer
Related Documents” is defined in Section 4.2(b).


 


“Casualty”
means any event or circumstance outside the ordinary course of business that occurs between the Effective Time and the Closing
Date causing physical damage to or destruction of all or any part of the Purchased Assets for any reason, including as a result
of fire, explosion, blowout, storm, tornado, hurricane, earthquake, earth movement, flood, water damage, or any similar event.


 


“Colfax
Exploration Partners I, LLC” means the limited liability company for federal income tax purposes


 


“Claim
Notice” is defined in Section 8.3(b).


 


“Claimed
Amount” means the amount of any Damages incurred or reasonably expected to be incurred by the Indemnified Person.


 


“Closing”
means the closing of the Transactions.


 


“Closing
Date” is defined in Section 2.1.


 


“Closing
Date Aggregate Purchase Price” is defined in Section 1.8(d).


 


“Closing
Deliverables Escrow Agreement” is defined in Section 2.2.


 


“Code”
means the Internal Revenue Code of 1986, as amended, and any successor Law.


 


“Commercial
Rules” means the Commercial Arbitration Rules of the AAA.


 


“Confidentiality
Agreement” is defined in Section 5.3(a).


 





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“Consideration”
means the warrants Seller will receive in exchange for properties being purchased by Buyer.


 


“Controlling
Party” means the party controlling the defense of any Third Person Claim.


 


“Damages”
means the amount of any Liability, loss, cost, expense, claim, award or judgment incurred or suffered by any Indemnified Person
arising out of or resulting from the indemnified matter, whether attributable to personal injury or death, property damage, contract
claims (including contractual indemnity claims), torts, or otherwise, including reasonable fees and expenses of attorneys, consultants,
accountants or other agents and experts reasonably incident to matters indemnified against, and the costs of investigation and/or
monitoring of such matters, and the costs of enforcement of the indemnity.


 


“Defensible
Title” is defined in Section 6.2.


 


“Dispute”
means the dispute resulting if the Indemnifying Party in a Response disputes its liability for all or part of the Claimed Amount.


 


“Effective
Time Tank Oil” means oil and liquid Hydrocarbon inventories in tanks above the pipeline connections as of the Effective
Time.


 


“Effective
Time” means 12:01 a.m. Central time on July 1, 2010.


 


“Environmental
Cure Period” is defined in Section 5.3(c)(i).


 


“Environmental
Defect” is defined in Section 5.3(b).


 


“Environmental
Defect Value” is defined in Section 5.3(d).


 


“Environmental
Laws” means, as the same may have been amended, any federal, state or local Law relating to: (a) the control of any
potential pollutant or protection of the environment, including air, water or land; (b) the generation, handling, treatment, storage,
disposal or transportation of waste materials; or (c) the regulation of or exposure to hazardous, toxic or other substances alleged
to be harmful, including, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq.
(“CERCLA”); the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. (“RCRA”); the Federal
Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq. the Hazardous Materials
Transportation Act, 49 U.S.C. § 1471 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601 through 2629;
the Oil Pollution Act, 33 U.S.C. § 2701 et seq.; the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. §
11001 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300f through 300j; the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C. § 136 et seq.; the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq.; the Atomic Energy Act,
42 U.S.C. § 2011 et seq.; and all applicable related Law, whether local, state, territorial, or national, of any Governmental
Entity having jurisdiction over the property in question addressing pollution or protection of human health, safety, natural resources
or the environment and all regulations implementing the preceding. The term “Environmental Laws” includes all Orders
issued pursuant to Environmental Laws.


 


“Environmental
Matters” means any and all Actions, Orders, Liabilities (including attorneys’ fees and costs of litigation) of
any kind or character for pollution or environmental damages of any kind, including those relating to naturally occurring radioactive
materials, violations or alleged violations of Environmental Laws, common law causes of action such as negligence, gross negligence,
strict liability, nuisance or trespass, or fault imposed by Law or otherwise, and including all costs associated with remediation
and clean up, and fines and penalties associated with any of the preceding.


 


“Environmental
Permit” means any permit, license, registration or approval by any Governmental Entity made or issued under Environmental
Laws.


 


“Equipment”
is defined in Section 1.1(d).


 


“Escrow
Account” is defined in Section 1.4.


 


“Escrow
Agent” is defined in Section 1.4.


 


“Escrow
Agreement” is defined in Section 1.4.


 


“Escrow
Amount” is defined in Section 1.4(a).


 


“Estimated
Closing Defect Value” is defined in Section 6.9.


 


“Exchange”
is defined in Section 5.6(e).


 


“Excluded
Assets” is defined in Section 1.2.








 





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“Excluded
Liabilities” is defined in Section 1.3.


 


“Extended
Post-Closing Agreement Period” is defined in Section 1.4(b).


 


“Final
Adjustment Statement” is defined in Section 1.9(a).


 


“GAAP”
means United States generally accepted accounting principles.


 


“Governmental
Approvals” is defined in Section 5.1.


 


“Governmental
Entity” means any entity or body exercising executive, legislative, judicial, regulatory or administrative functions
of or pertaining to United States federal, state, local, or municipal government, foreign, international, multinational or other
government, including any department, commission, board, agency, bureau, subdivision, instrumentality, official or other regulatory,
administrative or judicial authority thereof, and any non-governmental regulatory body to the extent that the rules and regulations
or orders of such body have the force of Law.


 


“Hazardous
Materials” means any pollutant, contaminant, waste, or chemical, or any toxic, radioactive, ignitable, corrosive, reactive,
or otherwise hazardous substance, waste or material, or any substance, waste or material having any constituent elements displaying
any of the preceding characteristics and regulated under any Environmental Law and any substance, whether solid, liquid, or gaseous:
(a) which is listed, defined, or regulated as a “hazardous material,” “hazardous waste,” “solid
waste,” “hazardous substance,” “toxic substance,” “pollutant,” or “contaminant,”
or otherwise classified as hazardous or toxic, in or pursuant to any Environmental Law; (b) which is or contains asbestos, polychlorinated
biphenyls, radon, urea formaldehyde foam insulation, explosives, or radioactive materials; (c) any Hydrocarbons and any components,
fractions, or derivatives thereof, and any oil or gas exploration or production waste; or (d) which causes or poses a threat to
cause contamination or nuisance or a hazard to the environment or to the health or safety of persons.


 


“Hedge
Contract” means any contract to which Seller or any of its Affiliates is a party with respect to any swap, forward,
future or derivative transaction or option or similar agreement, whether exchange traded, “over-the-counter” or otherwise,
involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or
economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction
or any combination of these transactions.


 


“Hydrocarbon”
or “Hydrocarbons” means oil, gas, condensate and/or other liquid or gaseous hydrocarbons or any combination
thereof or products therefrom.


 


“Hydrocarbon
Tax” or “Hydrocarbon Taxes” means any hydrocarbon production, severance or similar excise Tax based
upon or measured by the operation of the Purchased Assets or the production of Hydrocarbons therefrom, but excluding any Property
Tax.


 


“Imbalance”
or “Imbalances” means any over-production, under-production, over-delivery, under-delivery or similar imbalance
of Hydrocarbons produced from or allocated to the Purchased Assets, regardless of whether such over-production, under-production,
over-delivery under-delivery or similar imbalance arises at the platform, wellhead, pipeline, gathering system, transportation
system, processing plant or other location.


 


“Income
Tax” means any federal, state, local or foreign income, franchise or similar Tax.


 


“Indemnified
Person” means a Buyer Indemnified Person or a Seller Indemnified Person.


 


“Indemnifying
Party” means the Party from whom indemnification is sought by the Indemnified Person.


 


“Initial
Adjustment Amount” is defined in Section 1.8.


 


“Instruments”
is defined in Section 5.7.


 


“Interim
Period” means that period of time commencing with the Effective Time and ending at 7:00 a.m. (Central Time) on the Closing
Date.


 


“Knowledge”
means: (a) with respect to Buyer, the actual knowledge of Mike Edwards following reasonable inquiry to their immediate subordinates;
and (b) with respect Seller, the actual knowledge of Richard Garzo, following reasonable inquiry to their immediate subordinates.


 


“Laws”
means any constitutional provision, statute or other law, rule, regulation, or interpretation of any Governmental Entity and any
Order.


 


“Lease”
or “Leases” is defined in Section 1.1(a).


 





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“Liabilities”
means, with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether known
or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured,
joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, and whether or not
the same is required to be accrued on the financial statements of such Person.


 


“Lien”
means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest or other similar encumbrance
in respect of such property or asset.


 


“Losses”
means any and all debts, obligations and other liabilities (whether absolute, accrued, contingent, fixed or otherwise, or whether
known or unknown, or due or to become due or otherwise), diminution in value, monetary damages, fines, fees, Taxes, penalties,
interest obligations, deficiencies, losses and expenses (including amounts paid in settlement, interest, court costs, costs of
investigators, reasonable fees and expenses of attorneys, accountants, financial advisors and other experts), and other actual
out of pocket expenses incurred in investigating and preparing for or in connection with any Action.


 


“Material
Contracts” or “Material Contract” is defined in Section 3.5.


 


“Minimum
Royalty Law” means the Texas Minimum Royalty Act., 58 P.S. § 33, et seq., as amended is not applicable.


 


“Minimum
Royalty Litigation” means all claims, causes of action or demands asserted in any proceeding, in effect now or at any
time prior to or on the Closing seeking to invalidate, terminate, cancel or void any Lease or to recover any minimum royalty,
improper deductions from royalty payments previously paid under such Lease or any other damage or relief, legal or equity, in
each case to the extent based upon any violation of any Minimum Royalty Law, including without limitation, the Minimum Royalty
Litigation set forth on Schedule 3.11.


 


“Net
Mineral Acres” with respect to the mineral estate in lands covered by a particular Lease, means the product of: (a)
the percentage mineral interest ownership of the lessor under such Lease; (b) the percentage working interest of Seller; and (c)
the total number of gross acres covered by such Lease.


 


“Net
Revenue Interest” mean the percentage share in all Hydrocarbons produced from a well, lease, unit or other Oil and Gas
Interest after satisfaction of applicable lessor royalties, overriding royalties, oil payments and other payments out of or measured
by the production of Hydrocarbons from such well, lease, unit or other Oil and Gas Interest.


 


“Non-controlling
Party” means the party not controlling the defense of any Third Person Claim.


 


“Notice”
is defined in Section 11.8(a).


 


“Objection
Date” means July 10, 2015.


 


“Oil
and Gas Interest(s)” means:


 


(a)   
all interests in and rights with respect to oil, gas, mineral and related properties and assets of any kind and nature, direct
or indirect, including working, royalty interests, production payments, operating rights, net profits interests, fee minerals,
fee royalties, other non-working interests and non-operating interests;


 


(b)   
interests in and rights with respect to Hydrocarbons and other minerals or revenues therefrom and contracts in connection therewith
and claims and rights thereto (including oil and gas leases, operating agreements, unitization and pooling agreements and orders,
division order, transfer orders, mineral deeds, royalty deeds, oil and gas sales, exchange and processing contracts and agreements
and, in each case, interests thereunder), surface interests, fee interests, reservations and concessions;


 


(c)   
easements, rights of way, licenses, permits, leases, and other interests associated with, appurtenant to, or necessary for the
operation of any of the preceding;


 


(d)   
interests in equipment and machinery (including well equipment and machinery), oil and gas production, gathering, transmission,
compression, treating, processing and storage facilities (including tanks, tank batteries, pipelines and gathering systems), pumps,
water plants, electric plants, gasoline and gas processing plants, refineries and other tangible personal property and fixtures
associated with, appurtenant to, or necessary for the operation of any of the preceding, in each case to the extent such interests
comprise a part of the Purchased Assets;


 


(e)   
any economic or contractual rights, options or interests in and to any of the preceding, including any sublease, farm- out or
farm-in agreement or production payment affecting any interest or estate in oil, gas or other hydrocarbons in place; and


 


(f)   
any and all rights and interests attributable or allocable thereto by virtue of any pooling, unitization, communitization, production
sharing or similar agreement, order or declaration.


 





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“Operating
Expenses” means all operating expenses (including overhead costs as provided in the applicable joint operating
agreements) and capital expenditures (including without limitation, drilling, casing and completion costs) incurred in the
ownership, use, maintenance or operation of the Purchased Assets in the ordinary course of business and, where applicable, in
accordance with the relevant operating or unit agreement, if any, including overhead costs charged to the Purchased Assets
under the relevant operating agreement or unit agreement (including, without limitation, all delay rentals and lease
extension payments), if any, but excluding costs, expenses and Liabilities attributable to:


 


(a)   
Liabilities for personal injury or death, property damage (other than damage to structures, fences, irrigation systems and other
fixtures, crops, livestock and other personal property in the ordinary course of business), torts, breach of contract (other than
failure to make payments under the terms of a contract) or violation of any Law (or private rights of action under any Law);


 


(b)   
Liabilities arising as a result of any breach by Seller or any Affiliate of Seller, as operator with respect to Operated Properties,
of any applicable operating agreement or any Assigned Contract;


 


(c)   
obligations to plug wells, dismantle or decommission facilities, close pits around plugged wells and restore the surface around
such wells, facilities and pits;


 


(d)   
environmental Liabilities, including obligations to remediate any contamination of groundwater, surface water, soil, sediments
or personal property under applicable Environmental Laws;


 


(e)    
obligations with respect to Imbalances;


 


(f)    
Liabilities with respect to payment of working interests and Royalties relating to the Purchased Assets, including those held
in suspense;


 


(g)   
obligations with respect to Hedge Contracts;


 


(h)  
claims for indemnification or reimbursement from any Third Person with respect to costs of the type described in the preceding
clauses (a) through (g), whether such claims are made pursuant to contract or otherwise;


 


(i)    
costs and expenses related to curing an Environmental Defect, Title Defect or Casualty; and


 


(j)    
all Property Taxes and Hydrocarbon Taxes.


 


“Order”
means any decree, injunction, judgment, order, award, ruling, assessment or writ by a court, administrative agency, regulatory
body, other Governmental Entity, arbitrator or arbitration panel.


 


“Parties”
means Buyer and Seller.


 


“Permitted
Encumbrances” is defined in Section 6.3.


 


“Person”
means an individual, a corporation, a partnership, a limited liability company, a trust, an unincorporated association, a Governmental
Entity, or any other entity or body.


 


“Preference
Right” means any right or agreement that enables any Person to purchase or acquire any Purchased Asset or any interest
in any Purchased Asset or portion of any Purchased Asset as a result of or in connection with: (a) the sale, assignment or other
transfer of any Purchased Asset or any interest in any Purchased Asset or portion of any Purchased Asset; or (b) the execution
or delivery of this Agreement or consummation or performance of the terms and conditions contemplated in this Agreement.


 


“Prepaid
JOA Funds” is defined in Section 1.10.


 


“Property
Tax” or “Property Taxes” means any ad valorem, property or similar Tax imposed with respect to the
Purchased Assets, but excluding any Hydrocarbon Tax.


 


“Post-Closing
Agreement” is described in Exhibit L.


 


“Purchase
Price” is defined in Section 1.4.


 


“Purchase
Price Adjustment” is defined in Section 1.6(b).


 


“Purchased
Assets” is defined in Section 1.1.


 


“Reasonable
Best Efforts” means best efforts, to the extent commercially reasonable, provided, however, that “Reasonable
Best Efforts” shall not include the obligation to expend money other than reasonable out-of-pocket costs and any costs or
fees expressly required or provided for under any applicable contract under which such waiver, consent or approval is being sought
or such notice is required to be given.


 


“Records”
is defined in Section 1.1(g).





 





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“Response”
means a written response from the Indemnifying Party to the Indemnified Person containing the information provided for in Section
8.3.


 


“Royalties”
means royalties and overriding royalties.


 


“Seller”
is defined in the first paragraph of this Agreement.


 


“Seller
Indemnified Persons” is defined in Section 8.2.


 


“Seller
Related Documents” is defined in Section 3.2(b).


 


“Sellers’
Representative” is defined in Section 11.14.


 


“Seller
Taxes” means: (a) all Income Taxes and other Taxes (other than Hydrocarbon Taxes, Property Taxes or Transfer Taxes in
respect of the Purchased Assets) of Seller in respect of its business or the ownership, operation or disposition of the Purchased
Assets for any taxable period or portion of any taxable period, whether before or after the Closing Date; and (b) all Hydrocarbon
Taxes and Property Taxes in respect of the Purchased Assets for any taxable period or portion of any taxable period ending immediately
before the Effective Time.


 


“Subject
Interests” is defined in Section 1.1(b).


 


“Tax”
or “Taxes” means, with respect to any Person, any unclaimed property or escheat obligations, and all taxes,
charges, fees, levies or other similar assessments or liabilities, including income, capital gains, estimated, gross receipts,
ad valorem, premium, value-added, excise, alternative minimum, real property, personal property, sales, use, transfer, escheat,
withholding, employment, unemployment, insurance, social security, business license, business organization, environmental, workers
compensation, payroll, profits, license, lease, service, service use, capital stock severance, stamp, occupation, windfall profits,
customs, duties, franchise, withholding and other taxes of any kind whatsoever imposed by the United States of America or any
state, local or foreign government, or any agency thereof, or other political subdivision of the United States or any such government,
and any interest, fines, penalties, assessments or additions to tax resulting from, attributable to or incurred in connection
with any tax or any contest or dispute thereof, and including any liability for any of the preceding taxes or other items arising
as a transferee, successor, by contract, operation of Laws or otherwise for which such Person may be liable.


 


“Tax
Partnership” is defined in Section 3.23.


 


“Tax
Proceeding” is defined in Section 5.6(d).


 


“Taxing
Authority” means, with respect to any Tax, the Governmental Entity that imposes such Tax, and the agency (if any) charged
with the collection of such Tax for such entity or subdivision, including any Governmental Entity that imposes, or is charged
with collecting, social security or similar charges or premiums.


 


“Tax
Returns” means all forms, reports, returns (including information returns), declarations, statements or other information
(including any related or supporting schedules or attachments to any of the preceding, and any amendments to any of the preceding)
supplied or required to be supplied to any Governmental Entity in connection with Taxes.


 


“Third
Person” means a Person that is not party to this Agreement.


 


“Third
Person Claim” is defined in Section 8.3(a)(i).


 


“Title
Arbitrator” is defined in Section 6.9.


 


“Title
Cure Period” is defined in Section 6.8(a).


 


“Title
Defect” is defined in Section 6.4.


 


“Title
Defect Deductible” is defined in Section 6.10(a).


 


“Title
Defect Notice” is defined in Section 6.6.


 


“Title
Defect Value” is defined in Section 6.5.


 


“Transaction
Documents” means, collectively, this Agreement, the Seller Related Documents, and the Buyer Related Documents.


 


“Transactions”
means, collectively, the transactions contemplated in the Transaction Documents.








 





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“Transfer
Requirement” means any consent, approval, authorization or permit of, or filing with or notification to, any Person
which is required to be obtained, made or complied with for or in connection with any sale, assignment or transfer of any Purchased
Asset or any interest in any Purchased Asset and if not so obtained, made or complied with, then such sale, assignment or transfer
would be rendered void or voidable or otherwise cancel, terminate or repudiate any Lease; provided, however, that
“Transfer Requirement” shall not include any consent of, notice to, filing with, or other action by any Governmental
Entity in connection with the sale or conveyance of, or interests in, oil and/or gas leases, or contracts or interests in such
contracts, if they are not required prior to assignment of such oil and/or gas leases, contracts or interests or they are customarily
obtained subsequent to the sale or conveyance (including consents from state agencies).


 


“Transfer
Taxes” means all sales, use, transfer, recording, stock transfer and similar taxes and fees, if any, arising on or after
the Closing Date of or in connection with the sale of the Purchased Assets under this Agreement.


 


“Treasury
Regulations” and “Treasury Regulation” means the final and temporary (but not proposed) income tax regulations
promulgated under the Code, as such regulations may be amended from time to time.


 


“Well”
or “Wells” is defined in Section 1.1(b).


 


“Well
Location” or “Well Locations” means those drilling locations identified and described on Exhibit
B.


 


“Working
Interest” means the percentage of costs and expenses attributable to the maintenance, development and operation of an
Oil and Gas Interest.


 


ARTICLE
XI


MISCELLANEOUS


 


11.1     Press
Releases and Announcements. Subject to a Party’s reasonable judgment that it is otherwise required by Law or by the
rules of a national securities exchange to make such disclosure, that Party shall, and shall cause its representatives (as
applicable), to (a)     consult with the other Party regarding the timing and content of all
announcements regarding this Agreement, Closing and the Transactions to the financial community, any Governmental Entity,
customers, suppliers or the general public and (b) use its Reasonable Best Efforts to agree upon the text of any such
announcement with the other party prior to its release.


 


11.2     No Third Party Beneficiaries. This Agreement confers rights and remedies on Indemnified Persons as provided in Article
VIII, and no other Person other than the Parties has rights or remedies under this Agreement.


 


11.3     Entire
Agreement. The Transaction Documents, the exhibits, the schedules and the other documents, instruments and agreements
specifically referred to in this Agreement or those documents or delivered under this Agreement or those documents
constitutes the final agreement between the Parties. It is the complete and exclusive expression of the Parties’
agreement on the subject matter of this Agreement. This Agreement supersedes all other oral or written agreements or policies
relating to this Agreement, except for the Confidentiality Agreement, which will continue in full force and effect in
accordance with its terms. The provisions of this Agreement may not be explained, supplemented, or qualified through evidence
of trade usage or a prior course of dealings. No conditions precedent to the effectiveness of this Agreement exist other than
those expressly stated in this Agreement. The parties acknowledge the Colfax Exploration Partners I, LLC is the assignee of
Mike Edwards under the Binding Letter of Intent dated November 13, 2014.


 


11.4   
Assignment and Delegation.


 


(a)   
No Party may assign any part of its rights or obligations under this Agreement without the other Party’s prior written consent,
which shall not be unreasonably withheld; provided that Buyer may, without obtaining the prior written consent of Seller,
assign: (i) Buyer’s rights and obligations, including all representations, warranties, and indemnities, under this Agreement,
in whole or in part, to any of its Affiliates, provided that any such assignment will not release Buyer from any of its obligations
under this Agreement; or (ii) an undivided 100% of Buyers rights and obligations (A), including all representations, warranties,
and indemnities, under this Agreement to Maxwell Resources, Inc.


 


11.4(a),
whether they are voluntary or involuntary, by merger, consolidation, dissolution, operation of law, or any other manner. For purposes
of this section 11.4, (i) a “change of control” is deemed an assignment of rights, and (ii) “merger” refers
to any merger in which a party participates, regardless of whether it is the surviving or disappearing entity.


 


(b)   

No Party may delegate any performance under this Agreement.


 


(c)   

Any purported assignment of rights or delegation of performance in violation of this Section 11.4 is void.


 


11.5     
Successors and Assigns.


 


(a)   
If an assignment of rights occurs, the non-assigning Party is deemed to have agreed to perform in favor of the assignee.


 





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(b)   
If an assignment of rights occurs, (i) a contemporaneous delegation is deemed to have occurred, and (ii) the assignee is deemed
to have assumed the assignor’s performance obligations in favor of the non-assigning Party; except in each case where evidence
exists to the contrary.


 


(c)   
This Section 11.5 does not address whether (i) rights under this Agreement are assignable or (ii) performance under this Agreement
is delegable. Section 11.4 addresses these matters.


 


(d)   
For purposes of this Section 11.5, (i) “assignment” means any assignment, whether voluntary or involuntary, by merger,
consolidation, dissolution, operation of law or any other manner, (ii) “assignee” means any successor or assign of
the assignor, (iii) a “change of control” is deemed an assignment of rights, and (iv) “merger” refers
to any merger in which a party participates, regardless of whether it is the surviving or disappearing corporation.


 


11.6  
Counterparts and Facsimile Signature. The Parties may sign this Agreement in several counterparts, each of which will be
deemed an original but all of which together will constitute one instrument. This Agreement may be executed by facsimile signature.


 


11.7  
Headings. The section headings in this Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.


 


11.8  
Notices.


 


(a)   
For a notice or other communication (a “Notice”) under this Agreement to be valid, it must be in writing and
signed by the sending Party, and the sending Party must use one of the following methods of delivery: (i) personal delivery; (ii)
registered or certified mail, in each case, return receipt requested and postage prepaid; or (iii) nationally recognized overnight
courier, with all fees prepaid.


 


(b)   
For a Notice to be valid, it must be addressed to the receiving party at one or more addresses listed below for the receiving
party or to any other address designated by the receiving party in a Notice in accordance with this section 11.8.


 





	 	If
    to Seller:	Colfax
    Exploration Partners I, LLC
	 	 	8335
    Santa Clara Drive
	 	 	Dallas,
    Texas 75218
	 	 	Attn:
    Richard Garza
	 	 	Phone:
    214-566-6690
	 	 	Email:
    richard.colfaxexploration@gmail.com
	 	 	 
	 	 If
    to Buyer:	Maxwell
    Resources, Inc.
	 	 	3131
    McKinney Ave, Suite 600
	 	 	Dallas,
    Texas 75204
	 	 	Attention:
    Mike Edwards
	 	 	Phone:
    817-907-5084
	 	 	Email:
    medwards@maxwellre.com




 





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(c)   
Subject to Section 11.8(d), a valid Notice is effective when received by the receiving party in accordance with Sections 11.8(a)
and 11.8(b) A Notice is deemed to have been received as follows:





 


(i)   
If it is delivered in person or sent by registered or certified mail or by nationally recognized overnight courier, upon the earlier
of (1) receipt as indicated by the date on the signed receipt, and (2) four Business Days after the Business Day on which it is
sent to the receiving party.


 


(ii)   
If the receiving party rejects or otherwise refuses to accept it, or if it cannot be delivered because of a change in address
for which no notice was given, then upon that rejection, refusal or inability to deliver.


 


(d)   
If a Notice is received after 5:00 p.m., Dallas, Texas time on a Business Day at the location specified in the address for the
receiving party, or on a day that is not a Business Day, then the Notice is deemed received at 9:00 a.m. on the next Business
Day.


 


(e)   
If more than one method for delivery of a Notice under Section 11.8(a) is used, the earliest Notice date established by Section
11.8(c) will control.


 


(f)   
If a Notice is given under this Section 11.8 of a permitted successor or assign of a Person, then a Notice will be given as provided
in this Section 11.8 also to such successor or assign of such Person.


 


11.9    
 Governing Law. The Laws of the State of Texas, without giving effect to principles of conflict of laws, govern all matters
arising under this agreement, including all tort claims.


 


11.10   Suspended
Funds. At Closing Sellers will transfer to Buyer all funds, if any, held by Sellers in suspense owing to Third Persons on
account of production from the Purchased Assets, together with identification of those funds on a Well-by-Well and owner-by-owner
basis. Buyer shall assume responsibility for the payment thereof to Third Persons entitled to the same, to the extent of the funds
transferred, and shall indemnify and hold Sellers harmless for claims related to or arising out of Buyer’s payment, mispayments
or failure to make payment of such funds. Sellers shall indemnify and hold harmless Buyer for claims related to wrongfully withheld
suspended funds attributable to the period of time prior to the Effective Time.


 


11.11    Amendments. No amendment of this Agreement will be effective unless it is in writing and signed by the Parties. To be valid,
any document signed by a Party in accordance with this Section 11.11 must be signed by an officer of that Party authorized to
do so.


 


11.12    Severability.
If any provision of this Agreement is held invalid, illegal or unenforceable, (a) the remainder of this Agreement, or
application of that provision to any Persons or circumstances other than those as to which it is held unenforceable, will
not be affected by that unenforceability and will be enforceable to the fullest extent permitted by Law, and (b) the Parties
shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties to the fullest
extent permitted by applicable Law.


 


11.13   Sellers’ Obligations Several Not Joint. Anything to the contrary notwithstanding, the obligations and liability of
each Seller, arising under and in connection with this Agreement shall be several, in proportion to its ownership interests in
the Purchased Assets giving rise to such obligations and liabilities, and not joint. The representations, warranties, and covenants
relating to the business organization of a “Seller” or “Sellers,” are made individually by each Seller
only as to such Seller’s business organization. Each covenant or representation, or warranty made by “Seller”
or “Sellers,” is made individually and severally by each Seller and, no Seller shall be liable to Buyer for any breach
by any other Seller.


 


11.14    Sellers’
Representative. Sellers hereby appoints Richard Garza as their sole representative (“Sellers’
Representative”) to act as the agent and on behalf of Sellers for all purposes under this Agreement, including for
the purposes of: (i) administering and supervising the conduct of Buyer’s Title Review pursuant to Article VI and the
conduct of Buyer’s physical inspection and Site Assessment pursuant to Article V including without limitation
determining any adjustments to the Purchase Price in accordance with Article I or Article VI, giving and receiving
environmental reports, materials and assessments as provided in Article V and entering into any agreements contemplated by
Article VI; (ii) determining whether the conditions to closing in Article II have been satisfied and supervising the Closing,
including waiving any such condition if Sellers’ Representative, in its sole discretion, determines that such waiver is
appropriate; (iii) taking any and all actions that may be necessary or desirable, as determined by Sellers’
Representative in its sole discretion, in connection with the amendment of this Agreement or waivers of any term of this
Agreement in accordance with Section 11.11; (vi) taking any and all actions that may be necessary or desirable, as determined
by Sellers’ Representative in its sole discretion, in connection with the payment of the costs and expenses incurred
with respect to Sellers in connection with the transactions contemplated by this Agreement; (vii) granting any consent or
approval on behalf of Sellers under this Agreement; (viii) executing and delivering any documents and interests or taking
any action as may be necessary or advisable pursuant to Section 5.6; and (ix) taking any and all other actions and doing any
and all other things provided in or contemplated by this Agreement to be performed by Sellers’ Representative on behalf
of Sellers. As the representative of Sellers, Sellers’ Representative shall act as the agent for Sellers, shall have
authority to bind Sellers in accordance with this Agreement, and Buyer may rely on such appointment and authority. Sellers
shall fully release, indemnify and hold Buyer harmless for any actions taken, or inactions by, Sellers’ Representative
in connection with this Agreement that are alleged to be in violation of Sellers’ Representative’s
authority.


 





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	Colfax Exploration Partners I, LLC and Maxwell Resources, Inc.	Intended for Addressee Only






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11.15    
Submission to Jurisdiction. Each Party: (a) submits to the jurisdiction of any state or federal court sitting in Dallas,
Texas in any Action arising out of or relating to this Agreement (including any Action for the enforcement of any arbitral award
made in connection with any arbitration of a Dispute hereunder); (b) agrees that all claims in respect of such Action may be heard
and determined in any such court; (c) waives any claim of inconvenient forum or other challenge to venue in such court; (d) agrees
not to bring any Action arising out of or relating to this Agreement in any other court; and (e) waives any right it may have
to a trial by jury with respect to any Action arising out of or relating to this Agreement; provided in each case that, solely
with respect to any arbitration of a Dispute, the Arbitrator shall resolve all threshold issues relating to the validity and applicability
of the arbitration provisions of this Agreement, contract validity, applicability of statutes of limitations and issue preclusion,
and such threshold issues shall not be heard or determined by such court. Each Party agrees to accept service of any summons,
complaint or other initial pleading made in the manner provided for the giving of notices in Section 11.8, provided that nothing
in this Section 11.15 shall affect the right of any Party to serve such summons, complaint or other initial pleading in any other
manner permitted by Law.


 


11.16    
Construction. (a) The language used in this Agreement shall be deemed to be the language chosen by the Parties to express
their mutual intent, and no rule of strict construction shall be applied against any Party.


 


(b)   
Any reference to any federal, state, local or foreign statute or Law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise.


 


(c)   
Any reference in this Agreement to “including” shall be interpreted as “including, without limitation.”


 


(d)   
Any reference to any Article, Section or paragraph shall be deemed to refer to an Article, Section or paragraph of this Agreement,
unless the context clearly indicates otherwise. All references to Exhibits and Schedules refer to the Exhibits and Schedules attached
to this Agreement, unless the context clearly indicates otherwise. The Exhibits and Schedules which are attached to this Agreement
are incorporated into and made a part of this Agreement for all purposes.


 


(e)   
The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question
of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption
or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this
Agreement.


 


(f)     The parties also represent that each had access to its own Attorney and each were in fact each represented by Counsel.


 


11.17   Limitation on Damages.

 


(a)  
COVERAGE. NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF THIS AGREEMENT, IT IS THE EXPLICIT
INTENT OF EACH PARTY HERETO THAT SELLER IS NOT MAKING ANY REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE, BEYOND THOSE REPRESENTATIONS OR WARRANTIES EXPRESSLY GIVEN IN THIS AGREEMENT AND IN THE ASSIGNMENT, BILL OF SALE AND
CONVEYANCE TO BE DELIVERED AT CLOSING, AND IT IS UNDERSTOOD THAT, WITHOUT LIMITING SUCH EXPRESS REPRESENTATIONS AND WARRANTIES,
BUYER TAKES THE PURCHASED ASSETS AS IS AND WHERE IS AND WITH ALL FAULTS. WITHOUT LIMITING THE GENERALITY OF THE IMMEDIATELY PRECEDING
SENTENCE, EXCEPT FOR THE REPRESENTATIONS, WARRANTIES AND COVENANTS EXPRESSLY GIVEN IN THIS AGREEMENT AND IN THE ASSIGNMENT, BILL
OF SALE AND CONVEYANCE TO BE DELIVERED AT CLOSING, SELLER HEREBY (I) EXPRESSLY DISCLAIMS AND NEGATES ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE, RELATING TO THE CONDITION OF THE PURCHASED ASSETS (INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR OF CONFORMITY TO MODELS
OR SAMPLES OF MATERIALS, OR THE PRESENCE OR ABSENCE OF ANY HAZARDOUS MATERIALS IN OR ON, OR DISPOSED OF OR DISCHARGED FROM, THE
PURCHASED ASSETS) AND (II) NEGATES ANY RIGHTS OF BUYER UNDER STATUTES TO CLAIM DIMINUTION OF CONSIDERATION AND ANY CLAIMS BY BUYER
FOR DAMAGES BECAUSE OF DEFECTS, WHETHER KNOWN OR UNKNOWN, IT BEING THE INTENTION OF SELLER AND BUYER THAT THE PURCHASED ASSETS
ARE TO BE ACCEPTED BY BUYER IN THEIR PRESENT CONDITION AND STATE OF REPAIR. FURTHERMORE IT IS REPRESENTED THAT EACH PARTY WAS
REPRESENTED BY COUNSEL AND DEPENDED ON COUNSEL FOR INPUT AND INTERPRETATION OF THIS TRANSACTION.


 


(b)   TEXAS
DECEPTIVE TRADE PRACTICES ACT WAIVER. BUYER (A) REPRESENTS AND WARRANTS TO SELLER THAT IT (I) IS ACQUIRING THE
PURCHASED ASSETS FOR COMMERCIAL OR BUSINESS USE, (II) IS REPRESENTED BY LEGAL COUNSEL, (III) ACKNOWLEDGES THE CONSIDERATION
PAID OR TO BE PAID FOR THE PURCHASED ASSETS WILL EXCEED $500,000, AND (IV) HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND
BUSINESS MATTERS SUCH THAT ENABLE IT TO EVALUATE THE MERITS AND RISKS OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT AND
IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION WITH RESPECT TO THE SELLER; AND (B) HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY AND ALL RIGHTS OR REMEDIES IT MAY HAVE UNDER THE DECEPTIVE TRADE PRACTICES – CONSUMER PROTECTION
ACT OF THE STATE OF TEXAS, TEX. BUS. & COM. CODE § 17.41 ET SEQ. TO THE MAXIMUM EXTENT IT CAN DO SO UNDER APPLICABLE
LAW, IF SUCH ACT WOULD FOR ANY REASON BE DEEMED APPLICABLE TO THE TRANSACTIONS CONTEMPLATED HEREBY.


 





	Asset Purchase Agreement between	Proprietary and Confidential
	Colfax Exploration Partners I, LLC and Maxwell Resources, Inc.	Intended for Addressee Only






    	30



    	 



    

 


WAIVER
OF CONSUMER RIGHTS


 


BUYER
WAIVES ITS RIGHTS UNDER THE DECEPTIVE TRADE PRACTICES – CONSUMER PROTECTION ACT, SECTION 17.41 ET SEQ., BUSINESS & COMMERCE
CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF BUYER’S OWN SELECTION,
BUYER VOLUNTARILY CONSENTS TO THIS WAIVER.


 


FURTHERMORE,
WITH RESPECT TO PURCHASED ASSETS WHICH ARE LOCATED IN A STATE OR SUBJECT TO A JURISDICTION OTHER THAN TEXAS, BUYER WAIVES ANY
COMPARABLE PROVISION OF THE LAW OF THE STATE OR OTHER JURISDICTION WHERE SUCH PURCHASED ASSETS ARE LOCATED OR TO WHICH SUCH PURCHASED
ASSETS ARE SUBJECT.


 


(c)   
DAMAGES. NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF THIS AGREEMENT, SELLER AND BUYER
AGREE THAT THE RECOVERY BY EITHER PARTY HERETO OF ANY DAMAGES SUFFERED OR INCURRED BY IT AS A RESULT OF ANY BREACH BY THE OTHER
PARTY OF ANY OF ITS REPRESENTATIONS, WARRANTIES OR OBLIGATIONS UNDER THIS AGREEMENT SHALL BE LIMITED TO THE ACTUAL DAMAGES SUFFERED
OR INCURRED BY THE NON- BREACHING PARTY (AND THE INDEMNIFIED PERSONS TO WHICH SUCH OBLIGATIONS MAY EXTEND UNDER THE TERMS HEREOF)
AS A RESULT OF THE BREACH BY THE BREACHING PARTY OF ITS REPRESENTATIONS, WARRANTIES OR OBLIGATIONS HEREUNDER AND IN NO EVENT SHALL
THE BREACHING PARTY BE LIABLE TO THE NON-BREACHING PARTY OR ANY INDEMNIFIED PERSON FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, EXEMPLARY
OR PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES, BUSINESS INTERRUPTION
OR LOST OR DELAYED PRODUCTION) SUFFERED OR INCURRED BY THE NON- BREACHING PARTY OR ANY INDEMNIFIED PERSON AS A RESULT OF THE BREACH
BY THE BREACHING PARTY OF ANY OF ITS REPRESENTATIONS, WARRANTIES OR OBLIGATIONS HEREUNDER. This Section shall operate only
to limit a Party’s liability and shall not operate to increase or expand any contractual obligation of a Party hereunder
or cause any contractual obligation of a Party hereunder to survive longer than provided in Section 8.4.


 


(d)   
PLUGGING AND ABANDONMENT OBLIGATIONS. NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF THIS
AGREEMENT, IT IS EXPRESSLY AGREED FOR ALL PURPOSES OF THIS AGREEMENT THAT (I) THE PLUGGING AND ABANDONMENT OBLIGATIONS CONSTITUTE
ASSUMED LIABILITIES, (II) THE PLUGGING AND ABANDONMENT OBLIGATIONS SHALL NOT CONSTITUTE ENVIRONMENTAL CONDITIONS, ENVIRONMENTAL
LIABILITIES, ENVIRONMENTAL DEFECTS OR ENVIRONMENTAL MATTERS, (III) EXCEPT FOR THE REPRESENTATION SET FORTH IN SECTION 3.15, SELLER
MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO THE PLUGGING AND ABANDONMENT OBLIGATIONS, AND (IV) SELLER
SHALL HAVE NO LIABILITIES OR OBLIGATIONS WITH RESPECT TO PLUGGING AND ABANDONMENT OBLIGATIONS EXCEPT TO THE EXTENT SUCH OBLIGATIONS
RELATE TO THE EXCLUDED ASSETS.


 


(e)     ENVIRONMENTAL RELEASE. Buyer and its Affiliates shall have no rights to recovery or indemnification for environmental
liabilities relating to the Purchased Assets under this Agreement or at law other than the rights and remedies specifically provided
in Article V herein or Article VIII herein (solely with respect to any breach by Sellers of their representation in Section 3.9),
and all rights or remedies which Buyer and its Affiliates may have at or under any law with respect to any environmental liabilities
are expressly waived other than the rights and remedies specifically provided in Article V herein or Article VIII herein (solely
with respect to any breach by Sellers of their representation in Section 3.9). FROM AND AFTER THE CLOSING AND EXCEPT FOR THE RIGHTS
AND REMEDIES SPECIFICALLY PROVIDED IN ARTICLE V HEREIN OR ARTICLE VIII HEREIN (SOLELY WITH RESPECT TO ANY BREACH BY SELLERS OF
THEIR REPRESENTATION IN SECTION 3.9), BUYER AND ITS AFFILIATES DO HEREBY AGREE, WARRANT AND COVENANT TO RELEASE, ACQUIT AND FOREVER
DISCHARGE EACH SELLER AND ITS AFFILIATES FROM ANY AND ALL CLAIMS OF WHATSOEVER NATURE, INCLUDING WITHOUT LIMITATION ALL CLAIMS
FOR CONTRIBUTION AND INDEMNITY UNDER STATUTE, INCLUDING THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY
ACT, OR COMMON LAW, WHICH COULD BE ASSERTED NOW OR IN THE FUTURE AND THAT RELATE TO OR IN ANY WAY ARISE OUT OF ENVIRONMENTAL LIABILITIES
OR OTHER ENVIRONMENTAL MATTERS RELATING TO THE PURCHASED ASSETS. FROM AND AFTER CLOSING, BUYER AND ITS AFFILIATES WARRANT, AGREE
AND COVENANT NOT TO SUE OR INSTITUTE ARBITRATION AGAINST ANY SELLER OR ITS AFFILIATES UPON ANY CLAIM FOR INDEMNITY AND CONTRIBUTION
THAT HAVE BEEN ASSERTED OR COULD BE ASSERTED FOR ANY ENVIRONMENTAL LIABILITIES OR OTHER ENVIRONMENTAL MATTERS RELATING TO THE
PURCHASED ASSETS, EXCEPT FOR THE PURPOSE OF ENFORCING ARTICLE V HEREIN OR ARTICLE VIII HEREIN (SOLELY WITH RESPECT TO ANY BREACH
BY SELLERS OF THEIR REPRESENTATION IN SECTION 3.9).


 


11.18     Minimum Royalty Litigation. Notwithstanding anything to the contrary herein, Sellers make no representation, warranty or
covenant with respect to any Minimum Royalty Litigation.


 


(REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK)


 


	Asset Purchase Agreement between	Proprietary and Confidential
	Colfax Exploration Partners I, LLC and Maxwell Resources, Inc.	Intended for Addressee Only






    	31



    	 



    




 


The
Parties are signing this Agreement on the date stated in the introductory clause.


 


SELLER:





 


	Colfax
    Exploration Partners I, LLC	 
	 	 
	By:	 /s/
Richard Garza
	 
	Name:
	Richard
    Garza	 
	Title:	Managing
    Member	 


 


	STATE
    OF TEXAS	§	 
	        	§	 
	COUNTY
    OF DALLAS	§	 


 


SUBSCRIBED
AND SWORN TO BEFORE ME on this the 27th day of July, 2015 to certify which witness my hand and seal of office.


 


	 	/s/
	 	Notary
    Public, State of Texas
	 	 
	 	My
    Commission Expires: ______________


 


 


	BUYER:	 
	 	 
	Maxwell
    Resources, Inc.	 
	 	 
	By:	/s/
    Mike Edwards	 
	Name:
    	Mike
    Edwards	 
	Title:	CEO
    and President	 


 


	STATE
    OF TEXAS	§	 
	        	§	 
	COUNTY
    OF DALLAS	§	 


 


SUBSCRIBED
AND SWORN TO BEFORE ME on this the 27th day of July, 2015 to certify which witness my hand and seal of office.


 


	 	/s/
	 	Notary
    Public, State of Texas
	 	 
	 	My
    Commission Expires: ______________


 


[Signature
Page to Asset Purchase Agreement]


 


	Asset Purchase Agreement between	Proprietary and Confidential
	Colfax Exploration Partners I, LLC and Maxwell Resources, Inc.	Intended for Addressee Only


 


 


32