# EDGAR Filing Document

**Accession Number:** 0000855787
**File Stem:** 0001437749-23-003400
**Filing Date:** 2023-2
**Character Count:** 1410375
**Document Hash:** 89e8c555fc9b1134f82c4692a8dab4b4
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001437749-23-003400.hdr.sgml**: 20230214

**ACCESSION NUMBER**: 0001437749-23-003400

**CONFORMED SUBMISSION TYPE**: S-1

**PUBLIC DOCUMENT COUNT**: 47

**FILED AS OF DATE**: 20230214

**DATE AS OF CHANGE**: 20230214

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** ALPHA ENERGY INC
- **CENTRAL INDEX KEY:** 0000855787
- **STANDARD INDUSTRIAL CLASSIFICATION:** CRUDE PETROLEUM & NATURAL GAS [1311]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** CO
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** S-1
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-269780
- **FILM NUMBER:** 23632075

**BUSINESS ADDRESS:**
- **STREET 1:** 14143 DENVER WEST PARKWAY, SUITE 100
- **CITY:** GOLDEN
- **STATE:** CO
- **ZIP:** 80401
- **BUSINESS PHONE:** 1-800-819-0604

**MAIL ADDRESS:**
- **STREET 1:** 14143 DENVER WEST PARKWAY, SUITE 100
- **CITY:** GOLDEN
- **STATE:** CO
- **ZIP:** 80401

**As filed with the Securities and Exchange Commission on _____________, 2023.**

**SEC File No. 333-**

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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**______________________**

**FORM S-1**

**REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933**

**______________________**

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| |
|:---|
| **ALPHA ENERGY, INC.** |
| (Exact name of registrant as specified in its charter) |

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| | | |
|:---|:---|:---|
| **Colorado** | **1311** | **90-1020566** |
| *(State or other jurisdiction of*<br> *incorporation or organization)* | *(Primary Standard Industrial*<br> *Classification Code Number)* | *(I.R.S. Employer Identification Number)* |

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| |
|:---|
| **14143 Denver West Parkway**<br> **Suite 100**<br> **Golden, CO 80401**<br> **Telephone: (800) 819-0604** |
| *(Address, including zip code, and telephone number,*<br> *including area code, of registrant*'*s principal executive offices)* |
| <br> Jay Leaver<br> President<br> 14143 Denver West Parkway<br> Suite 100<br> Golden, CO 80401<br> Telephone: (800) 819-0604 |
| *(Name, address, including zip code, and telephone number,*<br> *including area code, of agent for service)* |
| ***Copies of all communications, including communications sent to agent for service, should be sent to:*** |

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| | |
|:---|:---|
| *Copy to:* | *Copy to:* |
| **Harvey Kesner, Esq.**<br> **Law Office of Harvey Kesner**<br> **500 Fifth Avenue**<br> **Suite 938**<br> **New York, NY 10010**<br> **(646) 678-2543** | **Brad L. Shiffman, Esq.**<br> **Blank Rome LLP**<br> **1271 Avenue of the Americas**<br> **New York, NY, 10020**<br> **(212) 885-5442** |

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**Approximate date of commencement of proposed sale to the public:** As soon as practicable after the effective date of this Registration Statement.

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If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

(Check one):

Large accelerated filer ☐ Accelerated filer ☐ <br> Non-accelerated filer ☒ Smaller reporting company ☒ <br> Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

**The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine.**

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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

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| | | |
|:---|:---|:---|
| **PRELIMINARY PROSPECTUS** | **SUBJECT TO COMPLETION** | **DATED _________ 2023** |

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**________Shares**

**Common Stock**

![lglogo.jpg](lglogo.jpg)

**Alpha Energy, Inc.**

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We are offering shares of our common stock at an assumed public offering price per share of $7.44 per share, which reflects the last reported sale price per share of our common stock as reported on the OTC Pink Open Markets on , 2023 under the symbol "APHE". The assumed public offering price used throughout this prospectus has been included for illustration purposes only. The actual offering price may differ materially from the assumed price used in the prospectus and will be determined by negotiations between us and the representatives of the underwriters, may not be indicative of prices of the actual offering price.

We have applied to list our common stock on the NYSE American Stock Exchange in connection with this offering.

**Investing in our common stock is involves a high degree of risk. See** "**Risk Factors**" **beginning on page __.**

**Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.**

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| | | |
|:---|:---|:---|
|  | **Per Share** | **Total** |
| Initial public offering price | $| $|
| Underwriting discounts and commissions<sup>(1)</sup> | $| $|
| Proceeds to us, before expenses | $| $|

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&nbsp;&nbsp;&nbsp;&nbsp;(1) Underwriting discounts and commissions do not include a non-accountable expense allowance equal to 1.0% of the initial public offering price payable to the underwriters. We refer you to "Underwriting" beginning on page __ for additional information regarding underwriters' compensation.

We have granted a 45-day option to the representative of the underwriters to purchase up to additional shares of common stock solely to cover over-allotments, if any.

The underwriters expect to deliver the shares to purchasers on or about , 2023.

**ThinkEquity**

The date of this prospectus is , 2023

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**TABLE OF CONTENTS**

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|:---|:---|
|  | Page |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prospectus Summary | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Risk Factors | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Special Note Regarding Forward Looking Statements | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Use of Proceeds | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Market for Our Common Stock and Related Stockholder Matters | 36 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Capitalization | 43 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dilution | 44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Management's Discussion and Analysis of Financial Condition and Results of Operation | 46 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Business | 50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Properties | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Management | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Executive Compensation | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Certain Relationships and Related Transactions | 64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Security Ownership of Certain Beneficial Owners and Management | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Description of Securities | 67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Underwriting | 69 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Legal Matters | 76 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Experts | 76 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Where You Can Find Additional Information | 76 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Index to Financial Statements | F-1 |

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**___________________________________________________**

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This prospectus constitutes a part of a registration statement on Form S-1 (or, together with all amendments and exhibits thereto, the Registration Statement) filed by us with the Securities and Exchange Commission, or the SEC, under the Securities Act of 1933, as amended, or the Securities Act. As permitted by the rules and regulations of the SEC, this prospectus omits certain information contained in the Registration Statement, and reference is made to the Registration Statement and related exhibits for further information with respect to Alpha Energy, Inc. and the securities offered hereby. With regard to any statements contained herein concerning the provisions of any document filed as an exhibit to the Registration Statement or otherwise filed with the SEC, in each instance reference is made to the copy of such document so filed. Each such statement is qualified in its entirety by such reference.

**You should rely only on the information contained in this prospectus or in any related free-writing prospectus. We and the underwriters have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectus prepared by us or on our behalf or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any information that others may give you.**

**This prospectus is an offer to sell only the common stock offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. We are not making an offer to sell these shares of common stock in any jurisdiction where the offer or sale is not permitted or where the person making the offer or sale is not qualified to do so or to any person to whom it is not permitted to make such offer or sale. The information contained in this prospectus is current only as of the date of the front cover of the prospectus. Our business, financial condition, operating results and prospects may have changed since that date.**

**Persons who come into possession of this prospectus and any applicable free writing prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus and any such free writing prospectus applicable to that jurisdiction. See** "***Underwriting***" **for additional information on these restrictions.**

**INDUSTRY AND MARKET DATA**

This prospectus includes statistical, market and industry data and forecasts which we obtained from publicly available information and independent industry publications and reports that we believe to be reliable sources. These publicly available industry publications and reports generally state that they obtain their information from sources that they believe to be reliable, but they do not guarantee the accuracy or completeness of the information. Although we are responsible for all of the disclosures contained in this prospectus, including such statistical, market and industry data, we have not independently verified any of the data from third-party sources, nor have we ascertained the underlying economic assumptions relied upon therein. In addition, while we believe the market opportunity information included in this prospectus is generally reliable and is based on reasonable assumptions, such data involves risks and uncertainties, including those discussed under the heading "*Risk Factors*."

**TRADEMARKS, TRADE NAMES AND SERVICE MARKS**

We own or have rights to trademarks, service marks and trade names that we use in connection with the operation of our business, including our corporate name, logos and website names. Other trademarks, service marks and trade names appearing in this prospectus are the property of their respective owners. Solely for convenience, some of the trademarks, service marks and trade names referred to in this prospectus are listed without the® and™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our trademarks, service marks and trade names.

This prospectus includes trademarks, service marks and trade names owned by us or other companies. All trademarks, service marks and trade names included in this prospectus are the property of their respective owners.

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**Prospectus Summary**

*This summary highlights selected information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information that you should consider before deciding whether to invest in our securities. You should carefully read the entire prospectus, including the risks associated with an investment in our company discussed in the* "*Risk Factors*" *section of this prospectus, before making an investment decision. Some of the statements in this prospectus are forward-looking statements. See the section titled* "*Cautionary Statement Regarding Forward-Looking Statements.*"

**Overview** 

We are an independent oil and natural gas producer. Our goal is to acquire and develop existing crude oil and natural gas properties. We use existing and new equipment to restart, rework and/or recomplete production sites. Our core focus of operation is in the Mid-Continent and Rocky Mountain regions.

During March 2022 we acquired percentage working interests and net revenue interests in leases located in Logan County, Oklahoma (the "Logan Project"), as well as 34 well bores and related assets and existing production equipment. A working capital interest represents the percentage of costs that we are obligated to pay and net revenue interest represents the percentage of revenue that we will earn from production. In most cases we are responsible for 100% of the working interest and are entitled to receive between 75% and 78% of the production revenue from the Logan Project, with the remainder going to the lessor as an overriding royalty interest per standard oil and natural gas lease terms in this area. The purchase price for the Logan Project consisted of $600,000 cash plus 3% of the net revenue from new wells drilled until the Seller receives $350,000.00. The acquired leases comprise approximately 2,080 gross acres of developed and undeveloped proven production in the Cherokee Uplift in central Oklahoma, including 34 well bores. Several of the bores are currently producing and we are selling oil and natural gas to local purchasers.

**Strategy**

Our strategy is to acquire and develop properties we can restart, rework, and/or recomplete which also have proven un-drilled potential to produce oil and natural gas. In this manner, we target acquiring existing infrastructure where there has been historic operations. Deployment of current modern technology in previously undeveloped or underdeveloped areas for production is also part of our strategy in order to enhance the value of acquired properties. We are currently modernizing our operations at the Logan Project and restarting, reworking and/or recompleting certain of the existing wells.

We intend to use the proceeds from the offering principally to make new acquisitions and restart, rework and/or recomplete wells at the Logan Project and to acquire and develop new locations. Our management possess many years of experience and knowledge of the oil and natural gas industry and believes that there are an abundance of additional acquisition candidates where historic operations were suspended during downturns in the market or where assets were foreclosed by lenders. Management believes that these properties have largely been overlooked by larger companies. In the process of identifying new acquisition prospects, we will utilize the expertise of our team and outsource to contract engineering firms the reviews needed to evaluate and develop new prospects.

**Certain Terminology** 

As used in this prospectus:

Restart - To restart production is to perform any necessary repairs of surface equipment in order to bring an idle well back into production.

Rework – To rework a well is to repair or replace any necessary equipment down in the borehole and/or perform additional treatments or stimulation of existing perforated zones to bring an idle well back into production.

Recomplete – To recomplete an existing well that may or may not be active or any action or methodology to re-enter the well to restore it or improve it. Recompletion is differentiated from restarting or reworking inasmuch as recompletion means opening a previously untapped behind pipe zone for production.

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**Corporate History and Information**

We were formed on September 26, 2013 as a Colorado corporation.

Our address is 14143 Denver West Parkway, suite 100, Golden, CO 80401. Our telephone number is (800) 819-0604. Our website address is <u>www.Alpha-energy.us.com</u>. The reference to our website is an inactive textual reference only and information contained in, or that can be accessed through, our website or any other website cited in this registration statement is not part hereof.

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|:---|:---|
| &nbsp;&nbsp;&nbsp;**The Offering** |  |
| &nbsp;&nbsp;&nbsp;Common shares to be offered: | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Common Stock. |
| &nbsp;&nbsp;&nbsp;Common stock outstanding prior to offering | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares |
| &nbsp;&nbsp;&nbsp;Common shares to be outstanding after this offering: | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares (or shares if the underwriters exercise their option to purchase additional shares in full) (based on Assumed Offering Price of $). |
| &nbsp;&nbsp;&nbsp;Option to purchase additional shares: | We have granted the underwriters an option for a period of 45 days from the date of this prospectus to purchase up to additional shares of our Common Stock, an amount equal to 15% of the number of shares offered hereby, on the same terms and conditions as set forth herein, to cover over-allotments, if any. |
| &nbsp;&nbsp;&nbsp;Use of proceeds: | We currently plan to use the net proceeds of this offering primarily for drilling and development, restart/rework/recomplete costs, selling, general and administrative, capital expenditures, new acquisitions, and general working capital (including repayment of advances, if any, under the Company's convertible credit line). |
| &nbsp;&nbsp;&nbsp;Risk factors: | An investment in our securities involves a high degree of risk and could result in a loss of your entire investment. See "Risk Factors" for a discussion of factors you should consider carefully before making an investment decision. |
| &nbsp;&nbsp;&nbsp;Common stock trading symbol: | APHE |

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The number of shares of common stock to be outstanding immediately after this offering is based on shares of common stock outstanding as of , 2023 includes 263,981 shares of common stock issuable upon conversion of $1,319,906 original principal amount of our 7.25% Notes at a conversion price of $5.00 per share, and excludes: (1) shares of common stock issuable upon exercise of warrants issuable in connection with this offering to the underwriters at an exercise price of $ per share; (2) conversion of advances under the Company's revolving convertible credit line with AEI Acquisition Company, LLC and 1,210,000 shares of common stock upon conversion of $1,210,000 of indebtedness incurred pursuant to a Purchase and Sale Agreement with Pure Oil & Gas, Inc. and ZQH Holding, LLC. As of the date of this prospectus no amounts are due under the convertible credit line. See "*Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline*".

Except as otherwise indicated, the discussion and the tables above assume no exercise of the underwriters' option to purchase additional shares of our common stock and excludes 2,824,000 shares of common stock available for future issuance under the Company's 2022 Plan.

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**SUMMARY CONSOLIDATED FINANCIAL DATA**

The following tables present the summary consolidated financial and other data for Alpha Energy, Inc. In accordance with Rule 3-13 of Regulation S-X the Company has excluded historical and pro-forma information because it believes that the financial information for the Logan Project is burdensome and such information would not be material to investors since the Logan Project was sold following bank foreclosure when the assets were inactive. The Company has omitted historical and pro-forma financial statements for oil and natural gas producing activities in reliance on Section 3-05 of Regulation S-X and elected to provide reserve information in accordance with Section 3-05(f)(1) thereof as unaudited supplemental information.

The summary of our audited consolidated statements of operations data for the years ended December 31, 2021 and 2020, and our unaudited data for the nine months ended September 30, 2022 and 2021 and the summary balance sheet data at September 30, 2022 and December 31, 2021 were derived from the consolidated financial statements of Alpha Energy, Inc. included elsewhere in this prospectus. The unaudited consolidated interim financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, that the Company considers necessary for a fair statement of the financial information set forth in those statements. The results of operations for the periods presented below are not necessarily indicative of the results to be expected for any future period and the results for any interim period are not necessarily indicative of the results that may be expected for a full year. The following summary consolidated financial and other data should be read in conjunction with the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes of Alpha Energy, Inc. included elsewhere in this prospectus.

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|:---|:---|:---|:---|:---|
|  | **Nine months ended**<br> **September 30,**<br> **2022** | **Nine months ended**<br> **September 30,** <br> **2021** | **Year ended**<br> **December 31,**<br> **2021** | **Year ended**<br> **December 31,**<br> **2020** |
| <u>Statement of Operations Data:</u> |  |  |  |  |
| Revenues | $144139 | $2369 | $3839 | $1217 |
| Lease operating expenses | 278533 | 7303 | 15652 | 2915 |
| Gross loss | (134394) | (4934) | (11813) | (1698) |
| Operating expenses | (1010921) | (625965) | (894498) | (1731916) |
| Other expenses | (58876) | (139105) | (164427) | (253364) |
| Net loss | $(1204191) | $(770004) | $(1070738) | $(1986978) |

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|:---|:---|:---|
|  | **September 30,** <br> **2022** | **December 31,** <br> **2021** |
| <u>Balance Sheet Data:</u> |  |  |
| Cash and cash equivalents | $742087 | $217 |
| Joint interest billing receivable | 7940 |  |
| Prepaid and other current assets | 75000 | 23750 |
| Property and equipment, net | 54378 |  |
| Oil and natural gas property, unproved, full cost | 1311003 | 145791 |
| Total assets | $2190408 | $169758 |
| Total liabilities | $3265839 | $2783218 |
| Total stockholders' deficit | (1075431) | (2613460) |
| Total liabilities and stockholders' deficit | $2190408 | $169758 |

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**SUMMARY OF RISK FACTORS**

An investment in our common stock involves a high degree of risk. You should carefully consider the risks summarized below. These risks are discussed more fully in the "*Risk Factors*" section immediately following this prospectus summary. These risks include, but are not limited to, the following:

*<u>Risks Related to Our Business and Industry</u>*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Our business could be materially adversely impacted by the COVID-19 pandemic.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Implementation of acquisitions initiatives could disrupt our operations in the near term and fail to provide the anticipated benefits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· If our systems suffer interruptions or failures, including as a result of cyber-attacks, our business operations could be disrupted and our reputation could suffer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· We rely on services from other parties. Defects in or the loss of access to services from third parties could increase our costs and adversely affect the quality of our products.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Failure to comply with data privacy and security laws and regulations could adversely affect our operating results and business.

*<u>Risks Related to This Offering and Ownership of Our Common Stock</u>*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The market price of our common stock may fluctuate, and you could lose all or part of your investment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· We may not be able to maintain a listing of our common stock on the NYSE American.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· We have considerable discretion as to the use of the net proceeds from this offering and we may use these proceeds in ways with which you may not agree.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· You will experience immediate and substantial dilution as a result of this offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· We do not expect to declare or pay dividends in the foreseeable future.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Future issuances of our common stock or securities convertible into, or exercisable or exchangeable for, our common stock, or the expiration of lock-up agreements that restrict the issuance of new common stock or the trading of outstanding common stock, could cause the market price of our securities to decline and would result in the dilution of your holdings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Future issuances of debt securities, which would rank senior to our common stock upon our bankruptcy or liquidation, and future issuances of preferred stock, which could rank senior to our common stock for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our common stock.

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**RISK FACTORS**

*Any investment in our securities involves a high degree of risk. Investors should carefully consider the risks described below and all of the information contained in this prospectus before deciding whether to purchase our securities. Our business, financial condition and results of operations could be materially adversely affected by these risks if any of them actually occur. This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks we face as described below and elsewhere in this prospectus.*

**Risk Factors Relating to Our Business**

***We may not be successful in producing oil or natural gas from some of our wells.***

Ten of our 34 wells are currently producing oil or natural gas. We recently attempted to restart six additional wells but had to shut in five due to uneconomic volumes of water and the sixth did not yield any product. It is unlikely that many of the remaining 18 wells could be economically re-started in the existing completion zones which, as used herein, refers to the Mississippian Lime Formation. Though some of these wells may be candidates for recompletion in alternate zones or depths, we may ultimately need to plug and abandon these wells which could have a material adverse effect on our business, financial condition and operating results.

Acquiring oil and natural gas properties requires us to assess reservoir and infrastructure characteristics, including recoverable reserves, development and operating costs and potential environmental and other liabilities. Such assessments are inexact and inherently uncertain and include properties with which we do not have a long operational history. In connection with the assessments, we intend to perform a review of the subject properties, but such a review will not reveal all existing or potential problems. In the course of our due diligence, we may not inspect every well or pipeline. We cannot necessarily observe structural and environmental problems, such as pipe corrosion, when an inspection is made. We may not be able to obtain contractual indemnities from the seller for liabilities created prior to our purchase of a property. We may be required to assume the risk of the physical condition of properties in addition to the risk that they may not perform in accordance with our expectations. If properties we acquire do not produce as projected or have liabilities, we were unable to identify, we could experience a decline in our reserves and production, which could adversely affect our business, financial condition and results of operations.

***We are currently producing a limited amount of oil and natural gas.***

We produced a limited amount of oil and natural gas in 2022. Through September 30, 2022 and thereafter, our production was not sufficient to cover our operating expenses, although the production was adequate to cover a majority of our well bore field operations.

***We have not completed a detailed geological/geophysical interpretation.***

We are currently examining the costs and benefits of conducting a high-quality 3D seismic survey over the field as well as at least one full suite of modern logs because the detailed historical well for the Logan Project (files typically kept by the operator) were lost. Without such data, we are relying on the available logs and completion information available for the state. As a result of using this limited data set, we are more likely to attempt recompleting zones that end up being uneconomic which could have a material adverse effect on our business, financial condition and operating results.<u> </u>

We may utilize detailed geological interpretation combined with advanced seismic exploration techniques to identify the most promising sites within our leases. Seeking fresh wells without guidance of seismic may risk incursion into an unknown fault zone and potentially losing the well in the event circulation is lost and cannot be restored. 3D seismic is especially important for guiding laterals of a horizontal drilling program: without seismic guidance, there is an increased risk of either running into a fault or simply straying out of the optimal pay zone, resulting in a sub-par or possibly sub-economic well. Additionally, advanced geostatistical techniques enable 3D seismic and modern downhole logs to be used to more accurately map reservoirs and reservoir compartments. With the relatively small acreage block in the Logan Project, we may not be able to permit a large enough survey to acquire reliable data.

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***We do not currently have any price hedges or other derivatives in place.***

We do not currently have any price hedges or other derivatives in place with respect to commodity prices and do not intend to engage in such activities in the near future. As a result, our financial condition and operating results could be adversely affected by fluctuations in commodity prices.

***We conduct our own field operations.***

<u>We</u> currently conduct all of our field operations through our wholly-owned subsidiary, Alpha Energy Texas Operating, LLC ("AETO"). Although we have a limited history of performing such operations, we believe we can perform these activities less expensively than using a third-party operator. In the event AETO cannot continue as operator (for instance, as a result of an accident or it loses its bond or insurance), then we would be forced to hire an outside operator and there can be no assurance that we would be able to do so or be able to do so on financially acceptable terms.

***We are dependent on a single purchaser of our oil.***

<u>We</u> sell all of our crude oil to Energy Transfer Crude Marketing LLC ("ETC Marketing") under a month-to-month agreement which may be terminated by either party upon 30 days advance written notice. In the event this agreement were to be terminated, there can be no assurance that we would be able to continue to sell crude oil produced at the Logan Project or be able to do so on financially acceptable terms. The failure to engage an alternative service provider if we lose the services of ETC Marketing would result in our inability to sell oil. There can be no assurance that ETC Marketing will continue to provide such services or that ETC Marketing or an alternative service provider will be available to provide services on financially acceptable terms.

***We are dependent on a single purchaser of our natural gas.***

We sell all of our natural gas to ETC Pipeline, Ltd. ("ETC Pipeline") under a month-to-month agreement which may be terminated by either party upon 60 days advance written notice. In the event this Agreement were to be terminated, there can be no assurance that we would be able to to continue to sell natural gas produced at the Logan Project or be able to do so on financially acceptable terms. The failure to engage an alternative service provider if we lose the services of ETC Pipeline would result in our inability to sell natural gas. There can be no assurance that ETC Pipeline will continue to provide such services or that ETC Pipeline or an alternative service provider will be available to provide services on financially acceptable terms.

***We have a limited operating history and limited experience pursuing our strategy and may not be able to operate our business successfully.***

We have a limited operating history and limited experience pursuing our strategy. Historical results are not indicative of, and may be substantially different than, the results we achieve in the future. We cannot assure you that we will be able to operate our business successfully, or acquire, restart, rework or recomplete additional oil and natural gas producing properties, or become profitable. The results of our operations depend on several factors, our success in attracting and retaining motivated and qualified personnel, the availability of adequate short and long-term financing, conditions in the financial markets, prices for oil and natural gas resources, and general economic conditions. In addition, our future operating results and financial data may vary materially from historical operating results and financial data because of a number of factors.

***We may not be able to continue operating as a going concern.***

We have experienced losses from operations since inception and have never generated positive cash flow. The success of our business plan during the next 12 months and beyond will be contingent upon generating sufficient revenue to cover our operating costs and obtaining additional financing. The report from our independent registered public accounting firm for the fiscal years ended December 31, 2021 and 2020 includes an explanatory paragraph stating the Company has recurring net losses from operations, and a net capital deficiency. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. If we are unable to obtain sufficient funding, our business, prospects, financial condition and results of operations will be materially and adversely affected, and we may be unable to continue as a going concern.

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***We have incurred net losses since inception.***

We have accumulated net losses of approximately $6.6 million as of September 30, 2022. These losses have had an adverse effect on our financial condition, stockholders' equity, net current assets, and working capital. We will need to generate higher revenues and control operating costs in order to attain profitability. There can be no assurances that we will be able to do so or to reach profitability. We expect losses to continue for the foreseeable future. We also expect that expenses will increase significantly as we seek to operate additional wells at the Logan Project and rework, restart, and recomplete existing wells at the Logan Project and elsewhere following future acquisitions, if any. We may never succeed in implementing our business strategy and, even if we do, we may never generate revenues that are significant or large enough to achieve profitability. If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the value of the Company and could impair our ability to raise capital and acquire and operate additional properties.

***We will need additional capital to fund our expanding operations, and if we are not able to obtain sufficient capital, we may be forced to limit the scope of our operations.***

We expect that our planned expansion of business activities will require additional working capital. If adequate additional debt and/or equity financing is not available on reasonable terms or at all, then we may not be able to continue to develop our business activities, and we will have to modify our business plan. These factors could have a material adverse effect on our future operating results and our financial condition.

If we are unable to raise needed additional funds to continue as a going concern, we could be forced to cease our business activities and dissolve. In such an event, we may incur additional financial obligations, including the accelerated maturity of debt obligations, lease termination fees, employee severance payments, and other creditor and dissolution-related obligations.

Our ability to raise financing through sales of equity securities depends on general market conditions and the demand for our common stock. We may be unable to raise adequate capital through sales of equity securities, and if our stock has a low market price at the time of such sales, our existing stockholders could experience substantial dilution. If adequate financing is not available or unavailable on acceptable terms, we may find we are unable to fund expansion, continue operating our properties, take advantage of acquisition opportunities, or restart, rework, or recomplete development projects, or to respond to competitive pressures in the industry which may jeopardize our ability to continue operations.

*We have granted a security interest in all of our well bores and other assets relating to the Logan Project to affiliates of our majority stockholder to secure our obligations under secured convertible notes.*

In December 2022, the Company and 20 Shekels, Inc. an affiliate of our President Jay Leaver, and AEI Management, Inc., an affiliate of our majority stockholder, AEI Acquisition Company, LLC, entered into Exchange Agreements (the "Exchange Agreements") with respect to certain outstanding indebtedness of the Company. Under the Exchange Agreements, the Company entered into a new 7.25% Senior Secured Note Purchase Agreement (the "NPA"), new 7.25% Senior Secured Note due December 31, 2024 (the "7.25% Notes") and a Security Agreement (the "7.25% Security Agreement", and together with the NPA and 7.25% Notes, the "7.25% Transaction Documents"). Under the terms of the Exchange Agreements, 20 Shekels, Inc. was issued a $906,754 principal amount 7.25% Notes and AEI Management, Inc. was issued $413,206 principal amount 7.25% Notes. Pursuant to the Security Agreement, the 7.25% Notes are secured by assets acquired in connection with the Company's acquisition of the Logan Project, including the 34 well bores relating to the Logan Project, other than the leases. In the event that we fail in the future to make any required payment under the agreements governing our indebtedness, we would be in default with respect to that indebtedness and the lenders could declare such indebtedness to be immediately due and payable. Since substantially all of our debt obligations are secured by our assets, upon a default, our lenders may be able to foreclose on our assets, which would result io the cessation of our operations at the Logan project and materially impact our business.

***We are subject to the risks relating to start-up oil and natural gas companies, including the risk that our oil and natural gas products may not be saleable to our targeted customers.***

Our business is new to the marketplace and as such we have limited information on which to estimate our sales levels, the amount of potential revenue, and our operating and other expenses. While we believe our energy products will meet purchaser specifications and conform to industry standards, we cannot assure that we will be successful in our efforts to market our energy resources as contemplated.

The risks, uncertainties and challenges encountered by start-up companies operating in the oil and natural gas industry include:

• Generating sufficient revenue to cover operating costs and sustain operations;

• Acquiring and maintaining market share;

• Attracting and retaining qualified personnel, especially engineers with the requisite technical skills;

• Successfully developing new locations;

• Accessing the capital markets to raise additional capital, on reasonable terms, if and when required to sustain operations or to grow the business.

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***We face competition from larger companies that have substantially greater resources which challenges our ability to acquire, explore and develop properties and grow our business, and reach profitability.***

The oil and natural gas industry is highly competitive. Our competitors and potential competitors include major oil companies and independent producers of varying sizes which are engaged in the acquisition of producing properties and the exploration and development of prospects. Most of our competitors have greater financial, personnel and other resources than we do and therefore have greater leverage in acquiring prospects, hiring personnel and marketing oil and natural gas. In addition, larger companies operating in the same area may be willing or able to offer oil and natural gas at a lower price.

We compete in Oklahoma with over 500 independent companies and approximately 40 significant independent operators including Marathon Oil, Devon Energy, Pioneer Natural Resources, and Mewbourne Oil Company in addition to over 450 smaller operations with no single producer dominating the area. Major operators such as ExxonMobil, Shell Oil, ConocoPhillips, and others that are considered major players in the oil and natural gas industry retain significant interests in Oklahoma. Our inability to compete effectively against these larger companies could have a material adverse effect on our business, financial condition and operating results.

***We may come under increased competition from alternative energy sources and conservation could reduce demand for natural gas and oil.***

While natural gas provides a capable partner to supplement power generation in times of low wind speed or cloudy weather and gasoline provides an extremely compact, energy-dense, and relatively safe fuel for vehicles, improvements in wind and solar power and especially improvements in battery technology could lead to a decrease in demand for our primary products. There has been a general trend to move toward renewable forms of electric generation and electrification of the transportation industry. Fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to natural gas and oil could reduce demand for natural gas and oil. The impact of the changing demand for natural gas and oil services and products may have a material adverse effect on our business, financial condition, results of operations and cash available for distribution.

***We may not be able to keep pace with technological advances.***

The energy industry in general, and the oil and natural gas industry in particular, continue to undergo significant changes, primarily due to technological developments. Because of the rapid growth of technology, shifting consumer tastes and the popularity and availability of other forms of energy, it is impossible to predict the overall effect these factors could have on potential revenue from, and profitability of, oil and natural gas exploration and development. Additionally, technological advances in fuel economy and energy generation devices could reduce demand for natural gas and oil. It is impossible to predict the overall effect these factors could have on our ability to compete effectively in a changing market, and if we are not able to keep pace with technological advances, then our revenues, profitability and results from operations may be materially adversely affected.

***Our results of operations may fluctuate from period to period which could cause volatility in our stock price.***

Results of operations for any company developing oil and natural gas leases and wells can be expected to fluctuate until the products are in the market and could fluctuate thereafter even when products are in the marketplace. There is significant lead time in developing, restarting, reworking, and recompleting wells. Unanticipated delays can adversely impact the release of supplies into the marketplace. Revenues generated could be adversely impacted if a lack of working capital limits our ability to acquire new equipment or assets.

Results of our operations depend significantly upon the price and value of our reserves and production, none of which can be predicted with certainty. Accordingly, our revenues and results of operations may fluctuate from period to period. The results of one period may not be indicative of the results of any future period. Any quarterly fluctuations that we report in the future may not match the expectations of market analysts and investors. This could cause the price of our common stock to fluctuate significantly.

***The loss of key executives may adversely affect our business.***

Our business is dependent upon our President Jay Leaver and his affiliated company, Leaverite Exploration and our Chief Financial Officer Lacie Kellogg. Our success is dependent upon the continued availability of Mr. Leaver and Ms. Kellogg, neither of whom have an employment agreement with us. If it became necessary to replace them, it is unlikely new management could be found with the same level of knowledge and experience or at the same or similar cost. The loss of the services of these officers would adversely affect our business.

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None of our executives have employment agreements or provisions that would restrict or prohibit them from competing with us and they currently devote only a portion of their time to the business of the Company. As a result, they could terminate their employment and immediately compete against us. The loss of the services of any member of our management team or other key persons could have a material adverse effect on our business, results of operations and financial condition.

None of our executives devotes their full-time efforts to the business of the Company. It is possible that situations may arise in the future where the personal interests of our officers and directors may conflict with our interests. Such conflicts could include determining what portion of their working time will be spent on our business and what portion on other business interests.

***Our executive officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our business.***

Our officers and directors are not required to commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and their other businesses. For example, Jay Leaver, our President, is only required to devote 50% of his time to the Company and Lacie Kellogg, our Chief Financial Officer, serves as chief financial officer and director of several companies. We do not intend to have any full-time employees for the foreseeable future. Each of our officers is engaged in other business endeavors for which they may be entitled to substantial compensation and our officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors may also serve as officers or board members for other entities. If our officers' and directors' other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our business.

***We may lose the services of key management personnel and may not be able to attract and retain other necessary personnel.***

Changes in our management could have an adverse effect on our business, and in particular while our staff is relatively small with only three contractors and no employees, we are dependent upon the active participation of several key management personnel, including Jay Leaver our President and Lacie Kellogg our Chief Financial Officer Each of these executives are critical to the strategic direction and overall management of our company as well as execution of our strategy. The loss of any of them could adversely affect our business, financial condition, and operating results. We do not carry key person life insurance.

We will need to hire and retain highly skilled technical personnel in order to pursue our strategy and grow our business. The competition for highly skilled technical, managerial, and other personnel is intense. Our recruiting and retention success is substantially dependent upon our ability to offer competitive salaries and benefits. We must compete with companies that possess greater financial and other resources than we do and that may be more attractive. To be competitive, we may have to increase the compensation, bonuses, stock options and other fringe benefits we offer in order to attract and retain such personnel. The costs of retaining or attracting personnel may have a material adverse effect on our business and operating results. If we fail to attract and retain the technical and managerial personnel required to be successful, our business, operating results and financial condition could be materially adversely affected.

***Litigation could harm our business or otherwise distract management.***

Substantial, complex or extended litigation could cause us to incur large expenditures and could distract management. For example, environmental or conservation lawsuits and lawsuits by government, environmental groups, consumers, employees or stockholders or litigation with federal, state or local governments or regulatory bodies could be very costly and disrupt business. While disputes from time to time are not uncommon, we may not be able to resolve such disputes on terms favorable to us which could have a material, adverse impact on our results of operations and financial condition.

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***If we lose our rights under our third-party leases or licenses, our operations could be adversely affected.***

Our business depends in part on property leases and other rights licensed from third parties. We could lose our exclusivity or other rights if we fail to comply with the terms and performance requirements of the leases, including failure to continue to actively utilize our leases. In addition, certain leases may terminate upon our breach and have the right to consent to sublease arrangements. If we were to lose our rights under any of these leases, or if we were unable to obtain required consents to future subleases, we could lose a competitive advantage in the market, and may even lose the ability to operate completely. Either of these results could substantially decrease our revenues

***The nature of our business involves significant risks and uncertainties that may not be covered by insurance or indemnity.***

We develop and sell resources where insurance or indemnification may not be available, including:

Certain of our activities are inherently dangerous and could result in loss of life or property damage. Certain products may raise questions with respect to issues of environmental harm or injury, trespass, conversion and similar concepts, which may raise complex legal issues. Indemnification to cover potential claims or liabilities resulting from a failure may be available in certain circumstances, but not in others. The insurance we maintain may not be adequate to protect against all our risks and uncertainties. Claims resulting from an accident, failure, environmental damage or liability arising from our activities in excess of any indemnity or insurance coverage (or for which indemnity or insurance is not available or was not obtained) could harm our financial condition, cash flows, and operating results. Any accident, failure, environmental damage or liability, even if fully covered or insured, could negatively affect our reputation among our customers and the public, and make it more difficult for us to operate.

***Our strategy may not be successful.***

We intend to expand our operations and base, in large part, by acquiring additional leases. Our operations are subject to all the risks inherent in the growth of a new business. The timing and related expenses of expansion may cause our revenues, if any, to fluctuate. The likelihood of our success must be considered in the light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with the growth of a business and the reliance on our ability to establish ongoing relationships with operators, mineral rights owners, and surface owners, and satisfy legal and regulatory requirements, as we encounter uncertainty about implementation of our strategies and capabilities, unfamiliarity with our operating methods, and competition. We may not be successful in our proposed business activities.

***We may be unable to generate sufficient revenue from our leases to achieve and sustain profitability.***

At present, we rely solely on our Logan Project to generate revenue and we expect to substantially generate all our revenue in the foreseeable future from these assets, which is currently inadequate to cover our costs. We will need to continue to expand our efforts to develop new relationships and expand existing relationships with lessors and energy production capabilities, to achieve and maintain compliance with all applicable regulatory requirements, and to develop additional locations that will generate cashflow. If we fail in these efforts we may never receive a return on the substantial investments in leases, production, distribution and environmental and, regulatory compliance we have made, and will make in the future, which may cause us to fail to generate revenue and achieve profitability.

***Cybersecurity risks could adversely affect our business and disrupt our operations.***

The threats to network and data security are increasingly diverse and sophisticated. Despite our efforts and processes to prevent breaches, our devices, as well as our servers, computer systems, and those of third parties that we use in our operations are vulnerable to cybersecurity risks, including cyber-attacks such as viruses and worms, phishing attacks, denial-of-service attacks, physical or electronic break-ins, employee theft or misuse, and similar disruptions from unauthorized tampering with our servers and computer systems or those of third parties that we use in our operations, which could lead to interruptions, delays, loss of critical data, unauthorized access to user data, and loss of consumer confidence. In addition, we may be the target of email scams that attempt to acquire personal information or company assets. Despite our efforts to create security barriers to such threats, we may not be able to entirely mitigate these risks. Any cyber-attack that attempts to obtain our or our users' data and assets, disrupt our service, or otherwise access our systems, or those of third parties we use, if successful, could adversely affect our business, operating results, and financial condition, be expensive to remedy, and damage our reputation. In addition, any such breaches may result in negative publicity, adversely affect our brand, decrease demand for our products and services, and adversely affect our operating results and financial condition.

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***There are economic and general risks relating to our business.***

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The success of our activities is subject to risks inherent in business generally, including demand for energy products and services, general economic conditions, changes in taxes and tax laws, and changes in governmental regulations and policies.

***Our operations are vulnerable to interruption or loss due to natural or other disasters, power loss, strikes, and other events beyond our control.***

A major earthquake, fire, cold weather events, or other disaster (such as a major flood, tsunami, volcanic eruption, or terrorist attack) affecting our facilities, or those of our suppliers or pipelines, could significantly disrupt our operations, and delay or prevent product shipment or installation during the time required to repair, rebuild, or replace our suppliers' damaged manufacturing facilities; these delays could be lengthy and costly. If any of our customers' facilities are negatively impacted by a disaster, shipments of our products could be delayed. Additionally, customers may delay purchases of our products until operations return to normal. Even if we are able to quickly respond to a disaster, the ongoing effects of the disaster could create some uncertainty in the operations of our business. In addition, our facilities may be subject to a shortage of available electrical power and other energy supplies. Any shortages may increase our costs for power and energy supplies or could result in blackouts, which could disrupt the operations of our affected facilities and harm our business. In addition, concerns about terrorism, the effects of a terrorist attack, political turmoil, or an outbreak of epidemic diseases could have a negative effect on our operations, those of our suppliers and customers, including the ability to travel.

***The near-term effects of the recent COVID-19 coronavirus pandemic are known, as they adversely affected our business. Some long- term effects, such as supply chain issues and inflation, are becoming known and may adversely affect our business, results of operations, financial condition, liquidity and cash flow.***

Over the past two years the impact of COVID-19 has had adverse effects on our business by slowing down our ability to work with third parties. We have witnessed supply chain related delays and increasing costs due to inflation. It is difficult to predict what other adverse effects, if any, COVID-19 and related matters can have on our business, or against the various aspects of same.

The COVID-19 pandemic could further negatively impact our business or results of operations through the temporary closure of our operating locations or those of our customers, contractors or suppliers. In addition, the ability of our employees, contractors and our suppliers' and customers' employees to work may be significantly impacted by individuals contracting or being exposed to COVID-19, or as a result of prevention and control measures, which may significantly hamper our production throughout the supply chain and constrict sales channels.

On January 30, 2020, the World Health Organization ("WHO") announced a global health emergency caused by a new strain of the coronavirus ("COVID-19") and advised of the risks to the international community as the virus spread globally. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in exposure globally. The spread of COVID-19 coronavirus caused public health officials to recommend precautions to mitigate the spread of the virus, especially as to travel and congregating in large numbers. Over time, the incidence of COVID-19 and its variants has diminished although periodic spikes in incidence occur. Consequently, restrictions imposed by various governmental health organizations may change over time. Several states have lifted restrictions only to reimpose such restrictions as the number of cases rise and new variants arise.

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***It is difficult to isolate the impact of the pandemic on our business, results of operations, financial condition and our future strategic plans.***

The Company may experience long-term disruptions to its operations resulting from changes in government policy or guidance; quarantines of employees, customers and suppliers in areas affected by the pandemic and the presence of new variants of COVID-19; and closures of businesses or manufacturing facilities critical to its business or supply chains. The Company is actively monitoring, and will continue to actively monitor, the pandemic and the potential impact on its operations, financial condition, liquidity, suppliers, industry and workforce.

***We may be negatively impacted by inflation.***

Increases in inflation could have an adverse effect on us. Current and future inflationary effects may be driven by, among other things, supply chain disruptions and governmental stimulus or fiscal policies, and geopolitical instability, including the ongoing conflict between the Ukraine and Russia. Continuing increases in inflation could increase our costs of labor and other costs related to our business, which could have an adverse impact on our business, financial position, results of operations and cash flows. Inflation has also resulted in higher interest rates in the U.S., which could increase our cost of debt borrowing in the future.

***We may be negatively impacted by the seasonality of our business.***

Winter weather conditions and lease stipulations can limit or temporarily halt restart, rework and recompletion activities and producing activities for oil and natural gas operations. These constraints and the resulting shortages or high costs could delay or temporarily halt the operations and materially increase our operating and capital costs. Such seasonal anomalies can also pose challenges for meeting objectives and may increase competition for equipment, supplies and personnel during the spring and summer months, which could lead to shortages and increase costs or delay or temporarily halt our operations.

**Risk Factors Relating to the Oil and Natural Gas Industry**

***Oil and natural gas prices fluctuate widely, and lower prices for an extended period of time are likely to have a material adverse impact on our business***.

Our revenues, profitability, cash flows and future growth, as well as liquidity and ability to access additional sources of capital, depend substantially on prevailing prices for oil and natural gas and the relative mix of these commodities in our reserves and production. Sustained lower prices will reduce the amount of oil and natural gas that we can economically produce and may result in impairments of our proved reserves or reduction of our proved undeveloped reserves. Oil and natural gas prices also affect the amount of cash flow we could utilize for capital expenditures and our ability to borrow and raise additional capital.

The supply of and demand for oil and natural gas impact the prices we realize on the sale of these commodities and, in turn, materially affect our financial results. Our revenues, operating results, cash available for distribution and the carrying value of our oil and natural gas depend significantly upon the prevailing prices for oil and natural gas. Oil and natural gas prices have historically been, and will likely continue to be, volatile. The prices for oil and natural gas are subject to wide fluctuation in response to a number of factors beyond our control, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the domestic and foreign supply of, and demand for, oil and natural gas;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• domestic and world-wide economic and political conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the level and effect of trading in commodity futures markets, including commodity price speculators and others;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• military, economic and political conditions in oil and natural gas producing regions, including unilateral supply actions taken by oil- and natural gas-producing countries such as Russia;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the actions taken by OPEC and other foreign oil and natural gas producing nations, including the ability of members of OPEC to agree to and maintain production controls;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact of the U.S. dollar exchange rates on oil and natural gas prices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the price and availability of, and demand for, alternative fuels;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• weather conditions and climate change;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• world-wide conservation measures, including governmental initiatives to move toward renewable electric generation and the electrification of the transportation industry;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• carbon reduction measures for all segments of the oil and natural gas industries, including production;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• technological advances affecting energy consumption and production;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in the price of oilfield services and technologies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the price and level of foreign imports;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• expansion of U.S. exports of oil, natural gas (including liquefied natural gas), and/or gas liquids;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the availability, proximity and capacity of transportation, processing, storage and refining facilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impacts and effects of public health crises, pandemics and epidemics such as the COVID-19 pandemic;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the costs of exploring, developing, producing, transporting (including costs relating to pipeline safety), and marketing oil; and natural gas; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the nature and extent of domestic and foreign governmental regulations and taxation, including environmental regulations.

Sustained material declines in oil or natural gas prices may have the following effects on our business:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limit our access to sources of capital, such as equity and long-term debt;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cause us to delay or postpone capital projects;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cause us to lose certain leases because we fail to meet obligations of the leases prior to expiration;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reduce reserve estimates and the amount of products we can economically produce;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• downgrade or other negative rating action with respect to our credit rating;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reduce revenues, income and cash flows available for capital expenditures, repayment of indebtedness and other corporate purposes; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reduce the carrying value of our assets in our balance sheet through ceiling test impairments.

***Legislation or regulatory initiatives intended to address seismic activity in Oklahoma and elsewhere could increase our costs of compliance or lead to operational delays, which could have a material adverse effect on our business, results of operations, cash flows or financial condition***.

In addition to oil and natural gas, most producing wells also produce saltwater, wastewater, brine, or produced water. We dispose of large volumes of saltwater produced in connection with our drilling and production, pursuant to permits issued to us by governmental authorities. While these permits are issued under existing laws and regulations, these requirements are subject to change, which could result in the imposition of more stringent operating constraints or new monitoring and reporting requirements, owing to, among other things, concerns of the public or governmental authorities regarding such gathering or disposal activities.

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There exists a consensus that the injection of produced water into belowground disposal wells triggers seismic events in certain areas, including Oklahoma, where we operate. In response to recent seismic events near underground water disposal wells, federal and some state agencies are investigating whether certain high volume disposal wells have caused or contributed to increased seismic activity, and some states have restricted, suspended or shut down the use of such disposal wells that are located in close proximity to areas of increased seismic activity.

The Oklahoma Corporation Commission (OCC) evaluates existing disposal wells to assess their continued operation, or operation with restrictions, based on location relative to faults, seismicity and other factors, with well operators in certain geographic locations required to make frequent, or even daily, volume and pressure reports. In addition, the OCC has adopted rules requiring operators of certain saltwater disposal wells in the state to, among other things, conduct additional mechanical integrity testing or make certain demonstrations of such wells' performance that, depending on the depth, could require the plugging back of such wells to shallower depths and/or the reduction of volumes disposed in such wells. As a result of these measures, the OCC from time to time has developed and implemented plans calling for wells within Areas of Interest where seismic incidents have occurred to restrict or suspend disposal well operations in an attempt to mitigate the occurrence of such incidents. For example, OCC has established a 15 thousand square mile Area of Interest in the Arbuckle formation located primarily north and east of the Anadarko Basin in the Mississippi Lime play. Since 2013, OCC has prohibited disposal into the basement rock and ordered reduction of disposal volumes into the overlying Arbuckle formation and directed the shut-in of a number of Arbuckle disposal wells in response to seismic activity. In addition, in January 2016, the Governor of Oklahoma announced a grant of $1.4 million in emergency funds to support earthquake research to be directed by the OCC and the Oklahoma Geological Survey (OGS). During September and November 2016, in response to the occurrence of earthquakes in Cushing and Pawnee, Oklahoma, located in the northeast area of the Anadarko Basin, the OCC developed action plans in conjunction with the OGS and the EPA. The plans require reductions in disposal volumes in three concentric zones from the center of the earthquake activity in both Cushing and Pawnee, Oklahoma, with the greatest reductions in the zone located closest to the center of the largest quakes. These actions are in addition to any previous orders to shut in wells or reduce disposal volumes. Prior measures had already reduced disposal volumes in the areas of concern by up to 50 percent for some disposal wells. In the Pawnee area, the action plan covers a total of 38 Arbuckle disposal wells under OCC jurisdiction and 26 Arbuckle disposal wells under EPA jurisdiction and in the Cushing area the plan covers a total of 58 Arbuckle disposal wells. Local residents have also recently filed lawsuits against saltwater disposal well operators in these areas for damages resulting from the increased seismic activity.

Additionally, in recent years there has been increased public concern regarding an alleged potential for hydraulic fracturing to induce seismic events. In December 2016, the OCC announced the development of seismicity guidelines focused on operators in SCOOP and STACK to directly address concerns related to induced seismicity and hydraulic fracturing. The OCC has established three action levels to be followed if events are detected at a M2.5 or above and within 1.24 miles (2 km) of hydraulic fracturing activities.

Magnitude 2.5 — OCC contacts the operator, discusses mitigation plan, operations may continue

Magnitude 3.0 — required minimum six-hour pause, technical call with OCC regarding mitigations, operations continue with an approved and revised completion plan

Magnitude 3.5 — required operations suspension, technical meeting with OCC and decision made to resume or halt operations based on approved and revised completion plan

Restrictions on disposal well volumes or a lack of sufficient disposal wells, the filing of lawsuits, or curtailment or restrictions on oil and natural gas activity generally in response to concerns related to induced seismicity, could cause us to delay, curb or discontinue our exploration and development plans. Increased costs associated with restrictions on hydraulic fracturing or the transportation and disposal of produced water, including the cost of complying with regulations concerning produced water disposal or hydraulic fracturing, such as mandated produced water recycling in some portion or all of our operations or prohibitions on performing hydraulic fracturing in certain areas, may reduce our profitability.

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These developments may result in additional levels of regulation, or increased complexity and costs with respect to existing regulations, that could lead to operational delays or increased operating and compliance costs, which could have a material adverse effect on our business, results of operations, cash flows or financial condition.

***We have substantial capital requirements to fund our business strategy that are greater than cash flows from operations. Limited liquidity would likely negatively impact our ability to execute our business plan***.

Our capital investment needs exceed our historical and projected cash flows from operations. As a result, we may use available cash or borrow funds under a credit facility, due in part to our acquisitions and restart, rework and recomplete activities including activities required in order to avoid future lease renewals to retain certain acreage. If necessary, we may continue to use cash on hand, sell non-strategic assets or potentially access debt and/or equity markets to fund any shortfall. Our ability to generate operating cash flows is subject to many risks and variables, such as the level of production from existing wells; prices of oil and natural gas; production costs; availability of economical gathering, processing, storage and transportation in our operating areas; our success in developing and producing new reserves and the other risk factors discussed in this Prospectus. Actual levels of capital expenditures may vary significantly due to many factors, including drilling results, commodity prices, industry conditions, the prices and availability of goods and services, unbudgeted acquisitions and the promulgation of new regulatory requirements. In addition, in the past, we often have increased our capital budget during the year as a result of acquisitions or changes in drilling plans. Alternatively, we may have to reduce capital expenditures, and our ability to execute our business plans could be adversely affected, if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we generate less operational cash flow than we anticipate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we are unable to sell non-strategic assets at acceptable prices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our customers or working interest owners default on their obligations to us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• one or more of the lenders under our existing credit arrangements fails to honor its contractual obligation to lend to us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• investors limit funding or refrain from funding oil and natural gas companies; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we are unable to access the capital markets at a time when we would like, or need, to raise capital.

***Actual quantities of oil and natural gas reserves and future cash flows from those reserves will most likely vary from our estimates***.

It is not possible to accurately measure underground accumulations of oil and natural gas. Estimating quantities of oil and natural gas reserves is complex and inexact. The process relies on interpretations of geologic, geophysical, engineering and production data. The extent, quality and reliability of these data can vary. The process also requires a number of economic assumptions, such as oil and natural gas prices, the relative mix of oil and natural gas that will be ultimately produced, drilling and operating expenses, capital expenditures, operating and development costs, future prices of these commodities, the effect of government regulation, taxes and availability of funds. The accuracy of a reserve estimate is a function of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the quality and quantity of available data;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the interpretation of that data;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the accuracy of various mandated economic assumptions and our expected development plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the judgement of the person preparing the estimate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• future natural gas and oil prices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unexpected complications from offset well development;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• production rates;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reservoir pressures, decline rates, drainage areas and reservoir limits;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• interpretation of subsurface conditions including geological and geophysical data;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• potential for water encroachment or mechanical failures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• levels and timing of capital expenditures, lease operating expenses, production taxes and income taxes, and availability of funds for such expenditures; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• effects of government regulation.

Actual quantities of oil and natural gas reserves, future oil and natural gas production and the relative mix of oil and natural gas that will be ultimately produced, oil and natural gas prices, revenues, taxes, capital expenditures, effects of regulations, funding availability and drilling and operating expenses will most likely vary from our estimates. In addition, the methodologies and evaluation techniques that we use, which include the use of multiple technologies, data sources and interpretation methods, may be different than those used by our competitors. Further, reserve estimates are subject to the evaluator's criteria and judgment and show important variability, particularly in the early stages of development. Any significant variance could be systematic and undetected for an extended period of time, which would materially affect the quantities and net present value of our reserves. In addition, we may adjust estimates of reserves to reflect production history, results of exploration and development activities, prevailing oil and natural gas prices and other factors, many of which are beyond our control. Our reserves also may be susceptible to drainage by operators on adjacent properties. If any of these assumptions prove to be incorrect, our estimates of reserves, the classifications of reserves based on risk of recovery and our estimates of the future net cash flows from our reserves could change significantly.

In accordance with SEC reporting rules, we calculate the estimated discounted future net cash flows from proved reserves using the SEC's pricing methodology for calculating proved reserves, adjusted for market differentials and costs in effect at year end discounted at 10% per annum. Actual future prices and costs may be materially higher or lower than the prices and costs we used as of the date of an estimate. Over time, we may make material changes to reserve estimates to take into account changes in our assumptions and the results of actual development and production. In addition, actual production rates for future periods may vary significantly from the rates assumed in the calculation. Moreover, the 10% discount factor used when calculating discounted future net cash flows, in compliance with the FASB statement on oil and natural gas producing activities disclosures, may not be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with the Company, or the oil and natural gas industry in general. You should not assume that the present value of future net cash flows is the current market value of our proved reserves.

The reserve estimates made for fields that do not have a lengthy production history are less reliable than estimates for fields with lengthy records. A lack of production history may contribute to inaccuracy in our estimates of proved reserves, future production rates and the timing of development expenditures. Further, our lack of knowledge of all individual well information known to the well operators such as incomplete well stimulation efforts, restricted production rates for various reasons and up-to-date well production data, etc. may cause differences in our reserve estimates.

***To grow our production and cash flows, we must continue to develop existing reserves and locate or acquire new reserves***.

Currently, our reserves are limited. However, our strategy is to grow our production and cash flows. As we produce oil and natural gas, our reserves decline. Unless we successfully replace reserves through acquisitions or other means the decline in our reserves will eventually result in a decrease in oil and natural gas production and lower revenue, income and cash flows from operations. Future oil and natural gas production is, therefore, highly dependent on our success in efficiently finding, developing or acquiring additional reserves that are economically recoverable. We may be unable to find, develop or acquire additional reserves or production at an acceptable cost, if at all. In addition, these activities require substantial capital expenditures.

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***Our future success depends on developing our existing inventory of mineral acreage and acquiring additional mineral interests. Failure to develop our existing inventory of mineral acreage and to acquire additional mineral interests will cause reserves and production to decline materially from their current levels.***

The rate of production from natural gas and oil properties generally declines as reserves are depleted. Our proved reserves will decline materially as reserves are produced except to the extent that we acquire additional mineral interests on properties containing proved reserves and our lessees or well operators conduct additional successful exploration and development drilling, successfully apply new technologies or identify additional behind-pipe zones (different productive zones within existing producing well bores) or secondary recovery reserves.

Developing natural gas and oil invariably involves unprofitable efforts, not only from dry wells, but also from wells that are productive but do not produce sufficient reserves to return a profit after deducting drilling, completion, operating and other costs. In addition, wells that are profitable may not achieve a targeted rate of return. We rely on third-party operators' interpretation of seismic data and other advanced technologies in identifying prospects and in conducting exploration and development activities. Nevertheless, prior to drilling a well, the seismic data and other technologies used do not allow operators to know conclusively whether natural gas, oil or NGL is present in commercial quantities.

Cost factors can adversely affect the economics of any project, and the eventual cost of drilling, completing and operating a well is controlled by well operators and existing market conditions. Further, drilling operations may be curtailed, delayed or canceled as a result of numerous factors, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•. unexpected drilling conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•. title problems;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•. pressure or irregularities in formations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•. equipment failures or accidents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•. fires, explosions, blowouts and surface cratering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•. availability to market production via pipelines or other transportation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•. adverse weather conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•. environmental hazards or liabilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•. lack of water disposal facilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•. governmental regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•. cost and availability of drilling rigs, equipment and services; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•. expected sales price to be received for natural gas, oil or NGL produced from the wells.

Competition for acquisitions of mineral interests may increase the cost of, or cause us to refrain from, completing acquisitions. Our ability to complete acquisitions is dependent upon, among other things, our ability to obtain debt and equity financing and, in some cases, regulatory approvals. Further, these acquisitions may be in geographic regions in which we do not currently hold properties, which could result in unforeseen operating difficulties. In addition, if we enter into new geographic markets, we may be subject to additional and unfamiliar legal and regulatory requirements. Compliance with regulatory requirements may impose substantial additional obligations on us and our management, cause us to expend additional time and resources in compliance activities and increase our exposure to penalties or fines for non-compliance with such additional legal requirements. Further, the success of any completed acquisition will depend on our ability to effectively integrate the acquired business or assets into our existing operations. The process of integrating acquired businesses or assets may involve unforeseen difficulties and may require a disproportionate amount of our managerial and financial resources. In addition, possible future acquisitions may be larger and for purchase prices significantly higher than those paid for earlier acquisitions.

No assurance can be given that we will be able to identify suitable mineral interest acquisition opportunities, negotiate acceptable terms, obtain financing for acquisitions on acceptable terms or successfully acquire identified targets. Our failure to achieve consolidation savings, to integrate the acquired businesses and assets into our existing operations successfully or to minimize any unforeseen operational difficulties could have a material adverse effect on our financial condition, results of operations and cash available for distribution. The inability to effectively manage the integration of acquisitions could reduce our focus on subsequent acquisitions and current operations, which, in turn, could negatively impact our growth, results of operations and cash available for distribution.

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***Any acquisition of additional mineral and royalty interests that we complete will be subject to substantial risks.***

Any acquisition involves potential risks, including, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the validity of our assumptions about estimated proved reserves, future production, prices, revenues, capital expenditures, operating expenses and costs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a decrease in our liquidity by using a significant portion of our cash generated from operations or borrowing capacity to finance acquisitions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a significant increase in our interest expense or financial leverage if we incur debt to finance acquisitions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the assumption of unknown liabilities, losses or costs for which we are not indemnified or for which any indemnity we receive is inadequate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• mistaken assumptions about the overall cost of equity or debt;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to obtain satisfactory title to the assets we acquire;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an inability to hire, train or retain qualified personnel to manage and operate our growing business and assets; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the occurrence of other significant changes, such as impairment of natural gas and oil properties, goodwill or other intangible assets, asset devaluation or restructuring charges.

***Lower oil and natural gas prices and other factors have resulted in ceiling test impairments in the past and may result in future ceiling test or other impairments***.

We use the full cost method of accounting for our oil and natural gas producing activities. Under this method, all costs incurred in the acquisition, exploration and development of oil and natural gas properties are capitalized into cost centers. The net capitalized costs of our oil and natural gas properties may not exceed the present value of estimated future net revenues from proved reserves, discounted at 10% per annum, plus the lower of cost or fair value of unproved properties. If net capitalized costs of our oil and natural gas properties exceed the cost center ceiling, we are subject to a ceiling test impairment to the extent of such excess. If required, a ceiling test impairment reduces income and stockholders' equity in the period of occurrence.

All long-lived assets, principally our natural gas and oil properties, are monitored for potential impairment when circumstances indicate that the carrying value of the asset on our books may be greater than our future net cash flows. The need to test a property for impairment may result from declines in natural gas and oil sales prices or unfavorable adjustments to natural gas and oil reserves. The decision to not participate in future development on our leasehold acreage can trigger a test for impairment. Also, once assets are classified as held for sale, they are reviewed for impairment. Because of the uncertainty inherent in these factors, we cannot predict when or if future impairment charges will be recorded.

The risk that we will be required to further impair the carrying value of our oil and natural gas properties increases when oil and natural gas prices are low or volatile for a prolonged period of time. In addition, impairments may occur if we experience substantial downward adjustments to our estimated proved reserves or our unproved property values, or if estimated future development costs increase. If an impairment charge is recognized, cash flow from operating activities is not impacted, but net income and, consequently, stockholders' equity are reduced. In periods when impairment

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***Restarting, Reworking and Recompleting is a costly and high-risk activity***.

In addition to the numerous operating risks described in more detail below, the restarting, reworking and recompleting of wells involves the risk that no commercially productive oil or natural gas reservoirs will be encountered. The seismic data and other technologies we use do not allow us to know conclusively if a well that oil and natural gas are present or may be produced economically. In addition, we are often uncertain of the future cost or timing of restarting, reworking or recompleting and producing wells. Furthermore, our operations may be curtailed, delayed or canceled as a result of a variety of factors, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increases in the costs of, or shortages or delays in the availability of, drilling rigs, equipment and materials;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• decreases in oil and natural gas prices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limited availability to us of financing on acceptable terms;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• adverse weather conditions and changes in weather patterns;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unexpected operational events and drilling conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• abnormal pressure or irregularities in geologic formations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• surface access restrictions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the presence of underground sources of drinking water, previously unknown water or other extraction wells or endangered or threatened species;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• embedded oilfield drilling and service tools;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• equipment failures or accidents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• lack of necessary services or qualified personnel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• availability and timely issuance of required governmental permits and licenses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• loss of title and other title-related issues;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• availability, costs and terms of contractual arrangements, such as leases, pipelines and related facilities to gather, process and compress, transport and market oil and natural gas; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• compliance with, or changes in, environmental, tax and other laws and regulations.

As we implement pad development and increase the lateral length and size of hydraulic fracturing stimulations of our horizontal wells, the costs and other impacts associated with any curtailment, delay or cancellation may increase due to the concentration of capital expenditures prior to bringing production online. Future restart, rework and recompletion activities may not be successful, and if unsuccessful, this could have an adverse effect on our future results of operations, cash flows and financial condition.

***The oil and natural gas business involves many operating risks that can cause substantial losses***.

Our oil and natural gas acquisition and production strategy is subject to all of the operating risks associated with drilling for and producing oil and natural gas, including the risk of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• fires and explosions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• blow-outs and cratering;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• uncontrollable or unknown flows of oil, gas or well fluids;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pipe or cement failures and casing collapses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pipeline or other facility ruptures and spills;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• equipment malfunctions or operator error;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• discharges of toxic gases;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• induced seismic events;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• environmental costs and liabilities due to our use, generation, handling and disposal of materials, including wastes, hydrocarbons and other chemicals; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• environmental damages caused by previous owners of property we purchase and lease.

Some of these risks or hazards could materially and adversely affect our results of operations and cash flows by reducing or shutting in production from wells, loss of equipment or otherwise negatively impacting the projected economic performance of our prospects. If any of these risks occur, we could incur substantial losses as a result of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• injury or loss of life;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• severe damage or destruction of property, natural resources and equipment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pollution and other environmental damage;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• investigatory and clean-up responsibilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• regulatory investigation and penalties or lawsuits;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limitation on or suspension of our operations; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• repairs and remediation costs to resume operations.

The magnitude of these risks may increase due to the increase in lateral length, larger multi-stage hydraulic fracturing stimulations for our horizontal wells and the implementation of pad development because of the larger amounts of liquids, chemicals and proppants involved.

In addition, our hydraulic fracturing operations require significant quantities of water. Regions in which we operate have recently experienced drought conditions. Any diminished access to water for use in hydraulic fracturing, whether due to usage restrictions or drought or other weather conditions, could curtail our operations or otherwise result in delays in operations or increased costs related to finding alternative water sources.

Failure or loss of equipment, as the result of equipment malfunctions, cyber-attacks or natural disasters, could result in property damage, personal injury, environmental pollution and other damages for which we could be liable. Catastrophic occurrences giving rise to litigation, such as a well blowout, explosion or fire at a location where our equipment and services are used, may result in substantial claims for damages. Ineffective containment of a drilling well blowout or pipeline rupture could result in extensive environmental pollution and substantial remediation expenses, as well as governmental fines and penalties. If our production is interrupted significantly, our efforts at containment are ineffective or litigation arises as the result of a catastrophic occurrence, our cash flows, and in turn, our results of operations, could be materially and adversely affected.

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In connection with our operations, we generally require our contractors, which include the contractor, its parent, subsidiaries and affiliate companies, its subcontractors, their agents, employees, directors and officers, to agree to indemnify us for injuries and deaths of their employees, contractors, subcontractors, agents and directors, and any property damage suffered by the contractors. There may be times, however, that we are required to indemnify our contractors for injuries and other losses resulting from the events described above, which indemnification claims could result in substantial losses to us. Contractor or customer contracts may also contain inadequate indemnity clauses, exposing us to unexpected losses or an unfavorable litigation position, and could, in turn, have a material adverse effect on our business, financial condition, results of operations and cash flows.

While we maintain insurance against some potential losses or liabilities arising from our operations, our insurance does not protect us against all operational risks. The occurrence of any of the foregoing events and any costs or liabilities incurred as a result of such events, if uninsured or in excess of our insurance coverage or not indemnified, could reduce revenue, income and cash flows and the funds available to us for our exploration, development and production activities and could, in turn, have a material adverse effect on our business, financial condition, results of operations and cash flows.

***Our proved undeveloped reserves may not be ultimately developed or produced. The development of our proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we currently anticipate***.

A significant amount of our total estimated proved reserves (by volume) were undeveloped and may not be ultimately developed or produced. Recovery of undeveloped reserves requires significant capital expenditures and successful drilling operations. Our reserve estimates assume we can and will make these expenditures and conduct these operations successfully. These assumptions, however, may not prove to be accurate. We cannot be certain that the estimated costs of the development of these reserves are accurate, that development will occur as scheduled, or that the results of such development will be as estimated. If we choose not to spend the capital to develop these reserves, or if we are not otherwise able to successfully develop these reserves, we will be required to remove the associated volumes from our reported proved reserves. In addition, under the SEC's reserve rules, because proved undeveloped reserves may be booked only if they relate to wells scheduled to be drilled within five years of the date of booking, we may be required to remove any proved undeveloped reserves that are not developed within this five-year time frame. A removal of such reserves may significantly reduce the quantity and present value of our natural gas and oil reserves which would adversely affect our business and financial condition.

***The potential adoption of federal, state, tribal and local legislative and regulatory initiatives related to hydraulic fracturing could result in operating restrictions or delays in the completion of oil and natural gas wells***.

Hydraulic fracturing is an essential and common practice in the oil and natural gas industry used to stimulate production of natural gas and/or oil from dense subsurface rock formations. We routinely apply hydraulic fracturing techniques on almost all of our U.S. onshore oil and natural gas properties. Hydraulic fracturing involves using water, sand or other proppant materials, and certain chemicals to fracture the hydrocarbon-bearing rock formation to allow flow of hydrocarbons into the wellbore.

As explained in more detail below, the hydraulic fracturing process is typically regulated by state oil and natural gas agencies, although the EPA, the BLM and other federal regulatory agencies have taken steps to review or impose federal regulatory requirements. Certain states in which we operate, have adopted, and other states are considering adopting, regulations that could impose more stringent permitting, public disclosure and well construction requirements on hydraulic fracturing operations or otherwise seek to ban fracturing activities altogether. Certain municipalities have already banned hydraulic fracturing, and courts have upheld those moratoria in some instances. In the past several years, dozens of states have approved or considered additional legislative mandates or administrative rules on hydraulic fracturing.

At the federal level, the EPA has taken numerous actions. The adoption of new federal rules or regulations relating to hydraulic fracturing could require us to obtain additional permits or approvals or to install expensive pollution control equipment for our operations, which in turn could lead to increased operating costs, delays and curtailment in the pursuit of exploration, development or production activities, which in turn could materially adversely affect our operations.

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In December 2016, the EPA released its final report on the potential impacts of hydraulic fracturing on drinking water resources. The final report concluded that "water cycle" activities associated with hydraulic fracturing may impact drinking water resources "under some circumstances," noting that the following hydraulic fracturing water cycle activities and local- or regional-scale factors are more likely than others to result in more frequent or more severe impacts: water withdrawals for fracturing in times or areas of low water availability; surface spills during the management of fracturing fluids, chemicals or produced water; injection of fracturing fluids into wells with inadequate mechanical integrity; injection of fracturing fluids directly into groundwater resources; discharge of inadequately treated fracturing wastewater to surface waters; and disposal or storage of fracturing wastewater in unlined pits. Since the report did not find a direct link between hydraulic fracturing itself and contamination of groundwater resources, we do not believe that this multi-year study report provides any basis for further regulation of hydraulic fracturing at the federal level.

Based on the foregoing, increased regulation and attention given to the hydraulic fracturing process from federal agencies, various states and local governments could lead to greater opposition, including litigation, to oil and natural gas production activities using hydraulic fracturing techniques. Additional legislation or regulation could also lead to operational delays or increased operating costs in the production of oil and natural gas, including from the developing shale plays, or could make it more difficult to perform hydraulic fracturing. The adoption of any federal, state or local laws or the implementation of regulations regarding hydraulic fracturing could potentially cause a decrease in the completion of new oil and natural gas wells and increased compliance costs and time, which could adversely affect our business, financial condition, results of operations and cash flows.

***Our ability to produce oil and natural gas economically and in commercial quantities could be impaired if we are unable to acquire adequate supplies of water for our operations or are unable to dispose of or recycle the water we use economically and in an environmentally safe manner***.

Development activities require the use of water. For example, the hydraulic fracturing process if employed to produce commercial quantities of natural gas and oil from many reservoirs requires the use and disposal of significant quantities of water. In certain regions, there may be insufficient local capacity to provide a source of water for our activities. In these cases, water must be obtained from other sources and transported to the drilling site, adding to the operating cost. Our inability to secure sufficient amounts of water, or to dispose of or recycle the water used in our operations, could adversely impact our operations in certain areas. Moreover, the imposition of new environmental initiatives and regulations could include restrictions on our ability to conduct certain operations, such as hydraulic fracturing or disposal of waste, including, but not limited to, produced water, drilling fluids and other materials associated with the exploration, development or production of NGLs, natural gas and oil. In recent history, public concern surrounding increased seismicity has heightened focus on our industry's use of water in operations, which may cause increased costs, regulations or environmental initiatives impacting our use or disposal of water. Furthermore, future environmental regulations governing the withdrawal, storage and use of surface water or groundwater necessary for hydraulic fracturing of wells could cause delays, interruptions or termination of operations, which may result in increased operating costs and have an effect on our business, results of operations, cash flows or financial condition.

***The marketability of our production is dependent upon transportation and processing facilities over which we may have no control***.

The marketability of our production depends in part upon the availability, proximity and capacity of pipelines, natural gas gathering systems and processing and refining facilities. We deliver oil and natural gas through gathering systems and pipelines that we do not own and which are operated by a sole source. The lack of alternatives or available capacity on these systems and facilities could reduce the price offered for our production or result in the shut-in of producing wells or the delay or discontinuance of development plans for properties. transportation of our production through some firm transportation arrangements, third-party systems and facilities may be temporarily unavailable due to market conditions or mechanical or other reasons, or may not be available to us in the future at a price that is acceptable to us. Also, the shipment of our or our operators' natural gas and oil on third-party pipelines may be curtailed or delayed if it does not meet the quality specifications of the pipeline owners. The curtailments arising from these and similar circumstances may last from a few days to several months. In many cases, we or our operators are provided only with limited, if any, notice as to when these circumstances will arise and their duration.

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Any significant curtailment in gathering system or transportation, processing or refining-facility capacity could reduce our or our operators' ability to market oil production and have a material adverse effect on our financial condition, results of operations and cash distributions to stockholders. Our or our operators' access to transportation options and the prices we or our operators receive can also be affected by federal and state regulation—including regulation of oil production, transportation and pipeline safety—as well as by general economic conditions and changes in supply and demand. New regulations on the transportation of oil by rail, like those finalized by the U.S. Department of Transportation (DOT) in 2015, may increase our transportation costs. . Federal regulation to improve the safety of existing pipeline infrastructure by replacement could increase the cost of interstate transportation. FERC's 2022 review of its policies relating to natural gas pipeline infrastructure could ultimately increase the cost of approving new interstate capacity or delay new interstate capacity being constructed. In addition, federal and state regulation of natural gas and oil production, processing and transportation, tax and energy policies, changes in supply and demand, pipeline pressures, damage to or destruction of pipelines, infrastructure or capacity constraints and general economic conditions could adversely affect our ability to produce, gather and transport natural gas. Any significant change in market factors or other conditions affecting these infrastructure systems and facilities, as well as any delays in constructing new infrastructure systems and facilities, could harm our business and, in turn, our financial condition, results of operations and cash flows.

***We may be involved in legal proceedings that could result in substantial liabilities.***

Like many companies in the oil and natural gas industry, we are from time to time involved in various legal and other proceedings, such as title, royalty or contractual disputes, regulatory compliance matters and personal injury or property damage matters, in the ordinary course of our business. Such legal proceedings are inherently uncertain and their results cannot be predicted. Regardless of the outcome, such proceedings could have an adverse impact on us because of legal costs, diversion of management and other personnel and other factors. In addition, it is possible that a resolution of one or more such proceedings could result in liability, penalties, or sanctions, as well as judgments, consent decrees or orders requiring a change in our business practices, which could materially and adversely affect our business, results of operations, cash flow and financial condition. Accruals for such liability, penalties or sanctions may be insufficient. Judgments and estimates to determine accruals or range of losses related to legal and other proceedings could change from one period to the next, and such changes could be material.

***We are subject to complex laws and regulatory actions that can affect the cost, manner, feasibility, or timing of doing business***.

Existing and potential regulatory actions could increase our costs and reduce our liquidity, delay our operations, or otherwise alter the way we conduct our business. Exploration and development and the production and sale of oil and natural gas are subject to extensive federal, state, provincial, tribal, local and international regulation. We may be required to make large expenditures to comply with environmental, natural resource protection, and other governmental regulations. Matters subject to regulation include the following, in addition to the other matters discussed under the caption "Regulation" in Items 1 and 2 of this report:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• restrictions for the protection of wildlife that regulate the time, place and manner in which we conduct operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amounts, types and manner of substances and materials that may be released into the environment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• response to unexpected releases into the environment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reports and permits concerning exploration, drilling, production, and other operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the placement and spacing of wells;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cement and casing strength;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unitization and pooling of properties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• calculating royalties on oil and natural gas produced under federal and state leases; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• taxation.

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Under these laws, we could be liable for personal injuries, property damage, oil spills, discharge of hazardous materials into the environment, remediation and clean-up costs, natural resource risk mitigation, damages and other environmental or habitat damages. We also could be required to install and operate expensive pollution controls, engage in environmental risk management, incur increased waste disposal costs, or limit or even cease activities on lands located within wilderness, wetlands or other environmentally or politically sensitive areas.

In addition, failure to comply with applicable laws also may result in the suspension or termination of our operations and subject us to administrative, civil and criminal penalties as well as the imposition of corrective action orders. Any such liabilities, penalties, suspensions, terminations, or regulatory changes could have a material adverse effect on our business, financial condition, results of operations or cash flows.

The matters described above and other potential legislative proposals, along with any applicable legislation introduced and passed in Congress or new rules or regulations promulgated by state or the US federal government, could increase our costs, reduce our liquidity, delay our operations, or otherwise alter the way we conduct our business, negatively impacting our financial condition, results of operations and cash flows.

Although it is not possible at this time to predict whether proposed legislation or regulations will be adopted as initially written, if at all, or how legislation or new regulation that may be adopted would impact our business, any such future laws and regulations could result in increased compliance costs or additional operating restrictions. Additional costs or operating restrictions associated with legislation or regulations could have a material adverse effect on our results of operations and cash flows, in addition to the demand for the oil and natural gas that we produce.

***Climate change laws and regulations restricting emissions of "greenhouse gases" could result in increased operating costs and reduced demand for the oil and natural gas that we produce while potential physical effects of climate change could disrupt our production and cause us to incur significant costs in preparing for or responding to those effects.***

In response to findings that emissions of carbon dioxide, methane, and other greenhouse gases (GHGs) present an endangerment to public health and the environment, the EPA has adopted regulations under existing provisions of the federal Clean Air Act that, among other things address GHG emissions for certain sources, including pipelines.

Although it is not possible at this time to predict how legislation or new regulations that may be adopted to address GHG emissions would impact our business, any such future laws and regulations imposing reporting obligations on, or limiting emissions of GHGs from, our equipment and operations could require us to incur costs to reduce emissions of GHGs associated with our operations. Severe limitations on GHG emissions could also adversely affect demand for the oil and natural gas we produce and lower the value of our reserves, which in turn could have a material adverse effect on our business, financial condition, results of operations or cash flows. Moreover, incentives to conserve energy or use alternative energy sources as a means of addressing climate change could reduce demand for natural gas, oil and NGL. Finally, it should be noted that some scientists have concluded that increasing concentrations of GHGs in the Earth's atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, floods, droughts and other extreme climatic events; if any such effects were to occur, they could have an adverse effect on our exploration and production operations.

***Certain U.S. federal income tax deductions currently available with respect to natural gas and oil exploration and development may be eliminated as a result of future legislation.***

In past years, legislation has been proposed that would, if enacted into law, make significant changes to U.S. tax laws, including to certain key U.S. federal income tax provisions currently available to oil and natural gas companies. Such legislative changes have included, but not been limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the repeal of the percentage depletion allowance for oil and natural gas properties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the elimination of current deductions for intangible drilling and development costs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the elimination of the deduction for certain domestic production activities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an extension of the amortization period for certain geological and geophysical expenditures.

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Although these provisions were largely unchanged in the Tax Act, which was signed on December 22, 2017, Congress could consider, and could include, some or all of these proposals as part of future tax reform legislation, to accompany lower federal income tax rates. Moreover, other more general features of any additional tax reform legislation, including changes to cost recovery rules, may be developed that also would change the taxation of oil and natural gas companies. It is unclear whether these or similar changes will be enacted in future legislation and, if enacted, how soon any such changes could take effect. The passage of any legislation as a result of these proposals or any similar changes in U.S. federal income tax laws could eliminate or postpone certain tax deductions that currently are available with respect to oil and natural gas development or increase costs, and any such changes could have an adverse effect on the Company's financial position, results of operations and cash flows.

***Competition for, or the loss of, our senior management or experienced technical personnel may negatively impact our operations or financial results***.

To a large extent, we depend on the services of our senior management and technical personnel and the loss of any key personnel could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our continued success and the success of other activities integral to our operations will depend, in part, on our ability to attract and retain a seasoned management team and experienced explorationists, engineers, geologists and other professionals. In the past, competition for these professionals was strong, and in a continuing price recovery environment may become strong again, which could result in future retention and attraction issues.

***Competition in the oil and natural gas industry is intense***.

We operate in a highly competitive environment for acquiring properties and marketing oil and natural gas. Our competitors include multinational oil and natural gas companies, major oil and natural gas companies, independent oil and natural gas companies, individual producers, financial buyers as well as participants in other industries supplying energy and fuel to consumers. During these periods, there is often a shortage of drilling rigs and other oilfield services. Many of our competitors have greater and more diverse resources than we do. In addition, high commodity prices, asset valuations and stiff competition for acquisitions have in the past, and may in the future, significantly increase the cost of available properties. We compete for the personnel and equipment required to explore, develop and operate properties. Our competitors also may have established long-term strategic positions and relationships in areas in which we may seek new entry. As a consequence, our competitors may be able to address these competitive factors more effectively than we can. If we are not successful in our competition for oil and natural gas reserves or in our marketing of production, our financial condition, cash flows and results of operations may be adversely affected.

***Shortages of oilfield equipment, services, supplies and qualified field personnel could adversely affect our financial condition, results of operations and cash flows***.

Periodically, there are shortages of drilling rigs, hydraulic fracturing stimulation equipment and crews, and other oilfield equipment as demand for that equipment has increased along with the number of wells being drilled. The demand for qualified and experienced field personnel to drill wells, conduct hydraulic fracturing stimulations and conduct field operations can fluctuate significantly, often in correlation with natural gas and oil prices, causing periodic shortages. These factors have caused significant increases in costs for equipment, services and personnel. Higher oil, natural gas, and NGL prices generally stimulate demand and result in increased prices for drilling rigs and crews, hydraulic fracturing stimulation equipment and crews and associated supplies, equipment, services and raw materials. Similarly, lower oil and natural gas prices generally result in a decline in service costs due to reduced demand for drilling and completion services.

Decreased levels of drilling activity in the oil and natural gas industry in recent periods have led to declining costs of some oilfield equipment, services, and supplies. However, if the current oil and natural gas market changes, and commodity prices continue to recover, we may face shortages of field personnel, drilling rigs, hydraulic fracturing stimulation equipment and crews or other equipment or supplies, which could delay or adversely affect our exploration and development operations and have a material adverse effect on our business, financial condition, results of operations or cash flows, or restrict operations.

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***We may not be insured against all of the operating risks to which our business is exposed***.

Our operations are subject to all of the risks normally incident to the exploration for and the production of oil and natural gas, such as well blowouts, explosions, oil spills, releases of gas or well fluids, fires, pollution and adverse weather conditions, which could result in substantial losses to us. See also "— *The oil and natural gas business involves many operating risks that can cause substantial losses*." Exploration and production activities are also subject to risk from political developments such as terrorist acts, piracy, civil disturbances, war, expropriation or nationalization of assets, which can cause loss of or damage to our property. We maintain insurance against many, but not all, potential losses or liabilities arising from our operations in accordance with what we believe are customary industry practices and in amounts and at costs that we believe to be prudent and commercially practicable. Our insurance includes deductibles that must be met prior to recovery, as well as sub-limits and/or self-insurance. Additionally, our insurance is subject to exclusions and limitations. Our insurance does not cover every potential risk associated with our operations, including the potential loss of significant revenues. We can provide no assurance that our insurance coverage will adequately protect us against liability from all potential consequences, damages and losses.

We currently have insurance policies that include coverage for general liability, excess liability, physical damage to our oil and natural gas properties, operational control of wells, oil pollution, third- party liability, workers' compensation and employers' liability and other coverages. Consistent with insurance coverage generally available to the industry, our insurance policies provide limited coverage for losses or liabilities relating to pollution and other environmental issues, with broader coverage for sudden and accidental occurrences. For example, we maintain operators extra expense coverage provided by third-party insurers for obligations, expenses or claims that we may incur from a sudden incident that results in negative environmental effects, including obligations, expenses or claims related to seepage and pollution, cleanup and containment, evacuation expenses and control of the well (subject to policy terms and conditions). In the specific event of a well blowout or out-of-control well resulting in negative environmental effects, such operators extra expense coverage would be our primary source of coverage, with the general liability and excess liability coverage referenced above also providing certain coverage.

In the event we make a claim under our insurance policies, we will be subject to the credit risk of the insurers. Volatility and disruption in the financial and credit markets may adversely affect the credit quality of our insurers and impact their ability to pay claims.

Further, we may elect not to obtain insurance if we believe that the cost of available insurance is excessive relative to the risks presented. Some forms of insurance may become unavailable in the future or unavailable on terms that we believe are economically acceptable. No assurance can be given that we will be able to maintain insurance in the future at rates that we consider reasonable, and we may elect to maintain minimal or no insurance coverage. If we incur substantial liability from a significant event and the damages are not covered by insurance or are in excess of policy limits, then we would have lower revenues and funds available to us for our operations, that could, in turn, have a material adverse effect on our business, financial condition, results of operations and cash flows.

***We may face various risk associated with the long-term trend toward increased activism against oil and natural gas exploration and development activities.***

Opposition toward oil and natural gas production has been growing globally. Companies in the oil and natural gas industry are often the target of activist efforts from both individuals and non-governmental organizations regarding safety, environmental compliance and business practices. Anti-development activists are working to, among other things, reduce access to federal and state government lands and delay or cancel certain projects such as the development of oil or gas shale plays. For example, environmental activists continue to advocate for increased regulations or bans on shale drilling and hydraulic fracturing in the United States, even in jurisdictions that are among the most stringent in their regulation of the industry. Future activist efforts could result in the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• delay or denial of drilling permits;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• shortening of lease terms or reduction in lease size;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• restrictions on installation or operation of production, gathering or processing facilities;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• restrictions on the use of certain operating practices, such as hydraulic fracturing, or the disposal of related waste materials, such as hydraulic fracturing fluids and produced water;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increased severance and/or other taxes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cyber-attacks;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• legal challenges or lawsuits;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• negative publicity about our business or the oil and natural gas industry in general;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increased costs of doing business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reduction in demand for our products; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other adverse effects on our ability to develop our properties and expand production.

We may need to incur significant costs associated with responding to these initiatives. Complying with any resulting additional legal or regulatory requirements that are substantial could have a material adverse effect on our business, financial condition, cash flows and results of operations.

***We may be subject to risks in connection with acquisitions and divestitures***.

As part of our business strategy, we have made and will likely continue to make acquisitions of oil and natural gas properties and to divest non-strategic assets. Suitable acquisition properties or suitable buyers of our non-strategic assets may not be available on terms and conditions we find acceptable or not at all.

Acquisitions pose substantial risks to our business, financial condition, cash flows and results of operations. These risks include that the acquired properties may not produce revenues, reserves, earnings or cash flows at anticipated levels. Also, the integration of properties we acquire could be difficult. In pursuing acquisitions, we compete with other companies, many of which have greater financial and other resources. The successful acquisition of properties requires an assessment of several factors, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• recoverable reserves;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• exploration potential;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• future oil and natural gas prices and their relevant differentials;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• operating costs and production taxes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• title defects with respect to acquired properties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a decrease in our liquidity by using a significant portion of our cash generated from operations or borrowing capacity to finance acquisitions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a significant increase in our interest expense or financial leverage if we incur debt to finance acquisitions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the assumption of unknown liabilities, losses or costs for which we are not indemnified or for which any indemnity we receive is inadequate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an inability to hire, train or retain qualified personnel to manage and operate our growing business and assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the occurrence of other significant changes, such as impairment of natural gas and oil properties, goodwill or other intangible assets, asset devaluation or restructuring charges; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• potential environmental and other liabilities.

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These assessments are complex and the accuracy of these assessments is inherently uncertain. In connection with these assessments, we perform a review of the subject properties that we believe to be generally consistent with industry practices. Our review will not reveal all existing or potential problems, nor will it permit us to become sufficiently familiar with the properties to fully assess their deficiencies and capabilities.

In addition, our divestitures may pose significant residual risks to the Company, such as divestitures where we retain certain liabilities or we have legal successor liability due to the bankruptcy or dissolution of the purchaser. Generally, uneconomic or unsuccessful acquisitions and divestitures may divert management's attention and financial resources away from our existing operations, which could have a material adverse effect on our financial condition, results of operations and cash flow.

***We depend on computer and telecommunications systems, and failures in our systems or cyber security attacks could significantly disrupt our business operations***.

The oil and natural gas industry has become increasingly dependent upon digital technologies to conduct day-to-day operations including certain exploration, development and production activities. We have entered into agreements with third parties for hardware, software, telecommunications and other information technology services in connection with our business. In addition, we have developed proprietary software systems, management techniques and other information technologies incorporating software licensed from third parties. We depend on digital technology to estimate quantities of oil and natural gas reserves, process and record financial and operating data, analyze seismic and drilling information, and communicate with our employees and third party partners. Our business partners, including vendors, service providers, purchasers of our production and financial institutions, are also dependent on digital technology. It is possible we could incur interruptions from cyber security attacks, computer viruses or malware. We believe that we have positive relations with our related vendors and maintain adequate anti-virus and malware software and controls; however, any cyber incidents or interruptions to our arrangements with third parties, to our computing and communications infrastructure or our information systems could lead to data corruption, communication interruption, unauthorized release, gathering, monitoring, misuse or destruction of proprietary or other information, or otherwise significantly disrupt our business operations. As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities.

***Hurricanes, typhoons, tornadoes, earthquakes, floods and other natural disasters could have a material adverse effect on our business, financial condition, results of operations and cash flow***.

Hurricanes, typhoons, tornadoes, earthquakes, floods, cold weather events, and other natural disasters can potentially destroy thousands of business structures and homes and, if occurring in the Gulf Coast region of the United States, could disrupt the supply chain for oil and natural gas products. Disruptions in supply could have a material adverse effect on our business, financial condition, results of operations and cash flow. Damages and higher prices caused by hurricanes, typhoons, tornadoes, earthquakes, floods, cold weather events, and other natural disasters could also have an adverse effect on our business, financial condition, results of operations and cash flow due to the impact on the business, financial condition, results of operations and cash flow of our customers.

***Delays in obtaining licenses, permits, and other government authorizations required to conduct our operations could adversely affect our business.***

Our operations require licenses, permits, and in some cases renewals of licenses and permits from various governmental authorities. Our ability to obtain, sustain or renew such licenses and permits on acceptable terms is subject to changes in regulations and policies and to the discretion of the applicable government agencies, among other factors. Our inability to obtain, or our loss of or denial of extension, to any of these licenses or permits could hamper our ability to produce income, revenues or cash flows from our operations.

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***We may incur losses as a result of title defects in the properties in which we invest.***

The existence of a material title deficiency can render a lease worthless and can adversely affect our results of operations and financial condition. While we typically obtain title opinions prior to commencing drilling operations on a lease or in a unit, the failure of title may not be discovered until after a well is drilled, in which case we may lose the lease and the right to produce all or a portion of the interest under the property.

***As we continue to expand our operations in Oklahoma, we may operate within the boundaries of Native American reservations and become subject to certain tribal laws and regulations.***

An entirely separate and distinct set of laws and regulations applies to operators and other parties within the boundaries of Native American reservations in the United States. Various federal agencies within the U.S. Department of the Interior, particularly the Bureau of Indian Affairs, the Office of Natural Resources Revenue and Bureau of Land Management (BLM), and the EPA, together with each Native American tribe, promulgate and enforce regulations pertaining to oil and natural gas operations on Native American reservations. These regulations include lease provisions, environmental standards, tribal employment contractor preferences and numerous other matters.

Native American tribes are subject to various federal statutes and oversight by the Bureau of Indian Affairs and BLM. However, each Native American tribe is a sovereign nation and has the right to enact and enforce certain other laws and regulations entirely independent from federal, state and local statutes and regulations, as long as they do not supersede or conflict with such federal statutes. These tribal laws and regulations include various fees, taxes, requirements to employ Native American tribal members or use tribal owned service businesses and numerous other conditions that apply to lessees, operators and contractors conducting operations within the boundaries of a Native American reservation. Further, lessees and operators within a Native American reservation are often subject to the Native American tribal court system, unless there is a specific waiver of sovereign immunity by the Native American tribe allowing resolution of disputes between the Native American tribe and those lessees or operators to occur in federal or state court.

We therefore may become subject to various laws and regulations pertaining to Native American oil and natural gas leases, fees, taxes and other burdens, obligations and issues unique to oil and natural gas operations within Native American reservations. One or more of these Native American requirements, or delays in obtaining necessary approvals or permits necessary to operate on tribal lands pursuant to these regulations, may increase our costs of doing business on Native American tribal lands and have an impact on the economic viability of any well or project on those lands.

***The conflict in Ukraine and related price volatility and geopolitical instability could negatively impact our business.***

In late February 2022, Russia launched significant military action against Ukraine. The conflict has caused, and could intensify, volatility in natural gas, oil and NGL prices, and the extent and duration of the military action, sanctions and resulting market disruptions could be significant and could potentially have a substantial negative impact on the global economy and/or our business for an unknown period of time. There is evidence that the increase in crude oil prices during the first half of calendar year 2022 was partially due to the impact of the conflict between Russia and Ukraine on the global commodity and financial markets, and in response to economic and trade sanctions that certain countries have imposed on Russia. Any such volatility and disruptions may also magnify the impact of other risks described in this "Risk Factors" section.

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**Risks Related to Our Common Stock**

***General securities market uncertainties resulting from the COVID-19 pandemic.***

Since the outset of the pandemic the United States and worldwide national securities markets have undergone unprecedented stress due to the uncertainties of the pandemic and the resulting reactions and outcomes of government, business and the general population. These uncertainties have resulted in declines in all market sectors, increases in volumes due to flight to safety and governmental actions to support the markets. As a result, until the pandemic has stabilized, the markets may not be available to the Company for purposes of raising required capital. Should we not be able to obtain financing when required, in the amounts necessary to execute on our plans in full, or on terms which are economically feasible we may be unable to sustain the necessary capital to pursue our strategic plan and may have to reduce the planned future growth and/or scope of our operations.

***General securities market uncertainties resulting in geo-political considerations.***

Since the outset of the military conflict in Ukraine, the United States and worldwide national securities markets have undergone unprecedented stress due to the uncertainties of that conflict and the resulting reactions and outcomes of governments, businesses, and the general population. These uncertainties have resulted in declines in all market sectors, increases in volumes due to flight to safety and governmental actions to support the markets. As a result, until the military conflict has stabilized, the markets may not be available to the Company for purposes of raising required capital. Should we not be able to obtain financing when required, in the amounts necessary to execute on our plans in full, or on terms which are economically feasible, we may be unable to sustain the necessary capital to pursue our strategic plan and may have to reduce the planned future growth and/or scope of our operations.

***General securities market uncertainties resulting in economic considerations.***

Recent unease regarding the geo-political considerations and increasing inflation has caused the United States and worldwide national securities markets to have undergone unprecedented stress due to the uncertainties of regarding the economy and the resulting reactions and outcomes of governments, businesses, and the general population. These uncertainties have resulted in declines in all market sectors, increases in volumes due to flight to safety and governmental actions to support the markets. As a result, until economic outlook has stabilized, the markets may not be available to the Company for purposes of raising required capital. Should we not be able to obtain financing when required, in the amounts necessary to execute on our plans in full, or on terms which are economically feasible, we may be unable to sustain the necessary capital to pursue our strategic plan and may have to reduce the planned future growth and/or scope of our operations.

***Our management and controlling stockholder, AEI Acquisition Company, LLC, has voting control of the Company***.

Our controlling stockholder, AEI Acquisition Company, LLC, currently owns approximately 74% of the total issued and outstanding common stock of the Company and our officers and directors own approximately 2.96% of our common stock (exclusive of shares of our common stock underlying the 7.25% Notes held by affiliates of Harry McMillan, who maintains sole voting and investment power over AEI Acquisition Company, LLC, which are subject to beneficial ownership blockers). AEI and management are able to influence the outcome of all corporate actions requiring approval of our stockholders, including the election of directors and approval of significant corporate transactions, which may result in corporate action with which other stockholders do not agree. This concentration of ownership may have the effect of delaying or preventing a change in control and may adversely affect the market price of our common stock.

***Our Bylaws provide that we will indemnify our directors, and that we have the power to indemnify our officers and employees, to the fullest extent permitted by law, which may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties, or from bringing derivative litigation against our directors and officers.***

Our Bylaws provide that we will indemnify any director, officer, employee or agent of the corporation, or any person serving in any such capacity of any other entity or enterprise at the request of the corporation, against any and all legal expenses (including attorneys' fees), claims and/or liabilities arising out of any action, suit or proceeding, except an action by or in the right of the corporation. The corporation may, but shall not be required to, indemnify any person where such person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, where there was not reasonable cause to believe the conduct was unlawful. The termination of any action, suit or proceeding by judgment, order or settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation, and that, with respect to any criminal action or proceeding, there was reasonable cause to believe that the conduct was unlawful. The corporation shall reimburse or otherwise indemnify any director, officer, employee, or agent against legal expenses (including attorneys' fees) actually and reasonably incurred in connection with defense of any action, suit, or proceeding herein above referred to, to the extent such person is successful on the merits or otherwise. Indemnification shall be made by the corporation only when authorized in the specific case and upon a determination that indemnification is proper by the stockholders, a majority vote of a quorum of the Board of Directors, consisting of directors who were not parties to the action, suit, or proceeding, or independent legal counsel in a written opinion, if a quorum of disinterested directors so orders or if a quorum of disinterested directors so orders or if a quorum of disinterested directors cannot be obtained.

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***Our failure to maintain effective internal controls over financial reporting could have an adverse impact on us***.

We are required to establish and maintain appropriate internal controls over financial reporting. Failure to establish those controls, or any failure of those controls once established, could adversely impact our public disclosures regarding our business, financial condition or results of operations. In addition, management's assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting, disclosure of management's assessment of our internal controls over financial reporting or disclosure of our public accounting firm's attestation to or report on management's assessment of our internal controls over financial reporting may have an adverse impact on the price of our Common Stock.

Management recently undertook an assessment of the effectiveness, as of December 31, 2021, of our internal control over financial reporting based on the framework and criteria established in the Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO" 2013). Based upon that evaluation, management concluded that our internal controls over financial reporting were not effective as of December 31, 2021.

Based on that evaluation, management concluded that, for the year ended December 31, 2021, such internal controls and procedures were not effective due to the following material weakness identified:

• lack of appropriate segregation of duties,

• lack of controls over proper maintenance of records,

• lack of control procedures that include multiple levels of supervision and review, and

• there is an overreliance upon independent financial reporting consultants for review of critical accounting areas and disclosures and material, nonstandard transactions

In addition, discovery and disclosure of a material weakness in the future or our inability to cure the material weakness we previously discovered and disclosed, by definition, could have a material adverse impact on our financial statements. Such an occurrence could negatively affect our business and affect how our stock trades. This could, in turn, negatively affect our ability to access public equity or debt markets for capital.

***We have never paid dividends and we do not expect to pay dividends for the foreseeable future***

We intend to retain earnings, if any, to finance the growth and development of our business and do not intend to pay cash dividends on shares of our common stock in the foreseeable future. The payment of future cash dividends, if any, depend upon, among other things, conditions then existing including earnings, financial condition and capital requirements, restrictions in financing agreements, business opportunities and other factors. As a result, capital appreciation, if any, of our common stock, will be your sole source of gain for the foreseeable future.

***An active, liquid trading market for our common stock may not develop or be sustained. If and when an active market develops the price of our common stock may be volatile.***

Prior to this offering, there has been no meaningful public market for our common stock although our common stock is quoted on the OTC Pink Open Markets. We have applied to list our common stock on the NYSE American Stock Exchange in connection with this offering however, an active trading market may not develop following the completion of this offering or, if developed, may not be sustained. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the price of shares of common stock. An inactive market may impair our ability to raise capital by selling shares and our ability to use our capital stock to acquire other companies or technologies. We cannot predict the prices at which our common stock will trade. The initial public offering price of our common stock may not bear any relationship to the market price at which our common stock will trade after this offering

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***Our Board of Directors may authorize and issue shares of new classes of stock that could be superior to or adversely affect current holders of our common stock.***

Our board of directors has the power to authorize and issue shares of classes of stock, including preferred stock that have voting powers, designations, preferences, limitations and special rights, including preferred distribution rights, conversion rights, redemption rights and liquidation rights without further stockholder approval which could adversely affect the rights of the holders of our common stock. In addition, our board could authorize the issuance of a series of preferred stock that has greater voting power than our common stock or that is convertible into our common stock, which could decrease the relative voting power of our common stock or result in dilution to our existing common stockholders.

Any of these actions could significantly adversely affect the investment made by holders of our common stock. Holders of common stock could potentially not receive dividends that they might otherwise have received. In addition, holders of our common stock could receive less proceeds in connection with any future sale of the Company, whether in liquidation or on any other basis.

***Our shares are subordinate to all of our debts and liabilities, which increases the risk that you could lose your entire investment.***

Our shares are equity interests that are subordinate to all of our current and future indebtedness with respect to claims on our assets. In any liquidation, all of our debts and liabilities must be paid before any payment is made to our stockholders.

***The market price of our shares of common stock is subject to fluctuation.***

The market prices of our shares may fluctuate significantly in response to factors, some of which are beyond our control, including:

• the announcement of new production or discoveries by our competitors

• the release of energy resources by our competitors and energy reserves by government and other bodies

• developments in our industry or markets changes in our reserve estimates;

• general market conditions including factors unrelated to our operating performance

***Future capital raises may dilute our existing stockholders***' ***ownership and/or have other adverse effects on our operations.***

If we raise additional capital by issuing equity securities, our existing stockholders' percentage ownership may decrease, and these stockholders may experience substantial dilution. If we raise additional funds by issuing debt instruments, these debt instruments could impose significant restrictions on our operations, including liens on our assets. If we raise additional funds through collaborations and licensing arrangements, we may be required to relinquish some rights to our technologies or products, or to grant licenses on terms that are not favorable to us or could diminish the rights of our stockholders.

***Investors in this offering will experience immediate and substantial dilution.***

The public offering price of the common stock sold in this offering will be substantially higher than the as adjusted net tangible book value per share of our common stock after this offering. Investors purchasing common stock in this offering will pay a price per share that substantially exceeds the as adjusted net tangible book value per share after this offering. As a result, investors purchasing common stock in this offering will incur immediate dilution of $ per share, or %, based on an assumed public offering price of $ per share, the last sale price of our common stock on , 2023, as reported on the OTC Pink Open Markets, representing the difference between our as adjusted net tangible book value per share after giving effect to this offering and the assumed public offering price.

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This dilution is due to our investors who purchased shares prior to this offering having paid substantially less when they purchased their shares than the price offered to the public in this offering. To the extent outstanding options are exercised, there will be further dilution to new investors. As a result of the dilution to investors purchasing shares in this offering, investors may receive significantly less than the purchase price paid in this offering, if anything, in the event of our liquidation. For a further description of the dilution that you will experience immediately after this offering, see the section titled "Dilution".

***Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.***

AEI Acquisition Company, LLC currently owns approximately 74% of the outstanding shares of our common stock. If it, or any other of our stockholders, sells substantial amounts of our common stock in the public market upon the expiration of any statutory holding period or otherwise, or issued upon the exercise of outstanding warrants or other rights to receive common stock, it could create a circumstance commonly referred to as an "overhang" and in anticipation of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. The shares of our restricted common stock will be freely tradable upon the earlier of: (i) effectiveness of a registration statement covering such shares and (ii) the date on which such shares may be sold without registration pursuant to Rule 144 (or other applicable exemption) under the Securities Act. Under the terms of a Purchase and Sale Agreement with Pure Oil & Gas, Inc. and ZQH Holding, LLC entered June 25, 2020 for the purchase of oil and natural gas assets in Rogers County, Oklahoma, the Company recorded $1,210,000 of convertible debt which is convertible into common stock at $1.00 per share. The Company has disputed its obligation to pay any further amounts under the Purchase and Sale Agreement due to the seller's failure to perform. In the event that the seller prevailed and was able to convert its debt into common stock, the Company could be required to issue additional shares of its common stock which constitutes additional overhang and could have the effects described above.

***Our common stock may become subject to the*** "***penny stock***" ***rules of the SEC, which would make transactions in our stock cumbersome and may reduce the value of an investment in our stock.***

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. If we do not retain a listing on the NYSE American Stock Exchange or another national securities exchange and if the price of our common stock is less than $5.00, our common stock could be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser's written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore stockholders may have difficulty selling their shares.

***We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.***

Our management will have broad discretion in the application of the net proceeds from this offering, including for any of the purposes described in the section titled "Use of Proceeds," and you will not have the opportunity as part of your investment decision to assess whether the net proceeds are being used appropriately. Because of the number and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. Our management might not apply our net proceeds in ways that ultimately increase or maintain the value of your investment.

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**CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS**

This prospectus contains forward-looking statements that are based on our management's beliefs and assumptions and on information currently available to us. All statements other than statements of historical facts are forward-looking statements. The forward-looking statements are contained principally in, but not limited to, the sections entitled "*Prospectus Summary*," "*Risk Factors*," "*Management*'*s Discussion and Analysis of Financial Condition and Results of Operations*" and "*Business*." These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

● our goals and strategies;

● our future business development, financial condition and results of operations;

● expected changes in our revenue, costs or expenditures;

● growth of and competition trends in our industry;

● our expectations regarding demand for, and market acceptance of, our products;

● our expectations regarding our relationships with investors, institutional funding partners and other parties with whom we collaborate;

● our expectation regarding the use of proceeds from this offering;

● fluctuations in general economic and business conditions in the markets in which we operate; and

● relevant government policies and regulations relating to our industry.

In some cases, you can identify forward-looking statements by terms such as "may," "could," "will," "should," "would," "expect," "plan," "intend," "anticipate," "believe," "estimate," "predict," "potential," "project" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the heading "*Risk Factors*" and elsewhere in this prospectus. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.

The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Although we will continue to be a public company after this offering and have ongoing disclosure obligations under United States federal securities laws, we do not intend to update or otherwise revise the forward-looking statements in this prospectus, whether as a result of new information, future events or otherwise.

**USE OF PROCEEDS**

After deducting the estimated underwriters' discounts and commissions and offering expenses payable by us, we expect to receive net proceeds of approximately $ million from this offering (or approximately $ million if the underwriters exercise the over-allotment option in full), based on an assumed public offering price of $ per share.

We plan to use the net proceeds of this offering as follows:

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| | |
|:---|:---|
|  | ($ in thousands) |
| Development expenses | $4750 |
| Restart, rework and recomplete wells | $1270 |
| General and administrative | $1650 |
| Capital expenditures | $1030 |
| Acquisitions | $12000 |
| General working capital (including repayment of advances, if any, under the Company's convertible credit line with AEI Acquisition Company, LLC) | $2170 |

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The foregoing represents our current intentions to use and allocate the net proceeds of this offering based upon our present plans and business conditions. However, we will have broad discretion in the way that we use the net proceeds of this offering. Pending the final application of the net proceeds of this offering, we intend to invest the net proceeds of this offering in short-term, interest-bearing, investment-grade securities.

**MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS**

**Market Information**

Our common stock is currently quoted on the OTC Pink Open Markets under the symbol APHE. We have applied to have our common stock listed on the NYSE American Stock Exchange under the symbol APHE.

Because we are quoted on the OTC Pink Open Markets, our securities may be less liquid, receive less coverage by security analysts and news media, and, therefore, may reflect lower prices than might otherwise be obtained if the shares were listed on a national securities exchange.

The following table sets forth the high and low bid quotations for our common stock as reported on the OTC Pink Open Markets for the periods indicated.

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| | | |
|:---|:---|:---|
|  | High | Low |
| Fiscal 2021 |  |  |
| First Quarter | $5.17 | $2.25 |
| Second Quarter | 6.00 | 1.31 |
| Third Quarter | 6.25 | 2.10 |
| Fourth Quarter | 5.00 | 2.01 |
| Fiscal 2022 |  |  |
| First Quarter | 5.05 | 1.35 |
| Second Quarter | 4.99 | 2.55 |
| Third Quarter | 7.05 | 2.50 |
| Fourth Quarter | 7.15 | 6.25 |
| Fiscal 2023 |  |  |
| First Quarter (through February 9) | 7.00 | 6.00 |

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**Holders**

As of January 31, 2023, there are 130 record holders of our common stock.

**Securities Authorized for Issuance under Equity Compensation Plans**

**ALPHA ENERGY, INC. 2022 EQUITY INCENTIVE PLAN**

**Description of Our 2022 Equity Incentive Plan**

On September 8, 2022, the Company's board of directors adopted the Alpha Energy, Inc. 2022 Equity Incentive Plan (the "2022 Plan"), an omnibus equity incentive plan pursuant to which the Company may grant equity incentive awards to participants and authorized that 2,824,000 shares of our common stock be reserved for issuance under the Plan.

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Set forth below is a summary of the 2022 Plan, but this summary is qualified in its entirety by reference to the full text of the 2022 Plan, a copy of which is included as <u>Appendix A</u> to the Company's Definitive Information Statement on Form 14C filed with the SEC on November 21, 2022 and incorporated by reference herein.

**Shares Available**

The 2022 Plan authorizes not more than 10,500,000 shares (8,750,000 shares post August 1, 2019 reverse stock split) of our common stock for issuance under the Plan, all of which are available for issuance pursuant to "incentive stock options" ("ISOs") under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") or as other type of awards. The Administrator may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute awards) and make adjustments in accordance with the 2022 Plan. Shares shall be counted against those reserved to the extent such shares have been delivered and are no longer subject to a substantial risk of forfeiture. Accordingly, (i) to the extent that an award under the 2022 Plan, in whole or in part, is canceled, expired, forfeited, settled in cash, settled by delivery of fewer shares than the number of shares underlying the award, or otherwise terminated without delivery of shares to the participant, the shares retained by or returned to the Company will not be deemed to have been delivered under the 2022 Plan and will be deemed to remain or to become available under the 2022 Plan; and (ii) shares that are withheld from such an award or separately surrendered by the participant in payment of the exercise price or taxes relating to such an award shall be deemed to constitute shares not delivered and will be deemed to remain or to become available under the 2022 Plan. The foregoing adjustments to the share limit of the 2022 Plan are subject to any applicable limitations under Section 162(m) of the Code with respect to awards intended to qualify as performance-based compensation under Section 162(m).

The number of shares available for issuance under the 2022 Plan (as well as the number of shares that may be issued as ISOs, and the share limitations set forth below under the heading "Performance Based Compensation") are subject to proportionate adjustment by the Administrator (as defined below) in the event of any reclassification, recapitalization, stock split (including a stock split in the form of a stock dividend) or reverse stock split, or upon any merger, arrangement, combination, consolidation, or other reorganization, or upon any spin-off, split-up or similar extraordinary dividend distribution in respect of the common stock, or upon any exchange of common stock or other securities of the Company, or upon any similar unusual or extraordinary corporate transaction in respect of the common stock.

As of January 31, 2023, there are 2,824,000 shares available for award under the 2022 Plan.

**Administration**

The 2022 Plan will be administered by the board of directors (the "Board") or by one or more committees of directors appointed by the Board (the "Administrator"). The Board may delegate different levels of authority to different committees with administrative and grant authority under the 2022 Plan. Any committee delegated administrative authority under the 2022 Plan may further delegate its authority under the Plan to another committee of directors, and any such delegate shall be deemed to be an Administrator of the 2022 Plan. Any Administrator may also, within its administrative authority under the 2022 Plan and in accordance with applicable law, delegate to one or more officers of the Company the ability to make awards to Eligible Persons (as defined below) under the 2022 Plan. It is anticipated that the Administrator (either generally or with respect to specific transactions) will be constituted so as to comply, as necessary or desirable, with the requirements of Code Section 162(m) and Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange Act")

**Eligibility**

Awards may be granted pursuant to the 2022 Plan only to persons who are eligible persons. Under the 2022 Plan, "Eligible Person" means any person who is either: (a) an officer (whether or not a director) or employee of the Company or one of its subsidiaries; (b) a director of the Company or one of its subsidiaries; or (c) an individual consultant who renders bona fide services to the Company or one of its subsidiaries; provided, however, that ISOs may be granted only to employees. As of the Record Date, the approximate number of Eligible Persons under the 2022 Plan included 2 officers or employees of the Company, 4 directors of the Company or one of its subsidiaries, and 3 consultants to the Company or one of its subsidiaries.

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**Awards**

The 2022 Plan permits the grant of: (a) stock options, which may be intended as ISOs or as nonqualified stock options (options not meeting the requirements to qualify as ISOs); (b) stock appreciation rights ("SARs"); (c) restricted stock; (d) restricted stock units; (e) cash incentive awards; or (f) other awards, including: (i) stock bonuses, performance stock, performance units, dividend equivalents, or similar rights to purchase or acquire shares, whether at a fixed or variable price or ratio related to the common stock, upon the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions, or any combination thereof; or (ii) any similar securities with a value derived from the value of or related to the common stock and/or returns thereon.

***Option and SAR Awards.*** Option and SAR awards granted under the 2022 Plan must have an exercise price or base price of no less than 100% of the fair market value of the common stock on the date of grant (or 110% of the fair market value on the date of grant, in the case of ISOs granted to certain ten percent stockholders of the Company). Options and SAR awards shall become exercisable upon such conditions (which may include the passage of time or the attainment of certain performance criteria) as the Administrator may establish in its sole discretion. The exercise price of any option shall be paid in cash or by any of the methods set forth below under the heading "*Consideration for Awards.*" Option and SAR awards are exercisable for a period established by the Administrator, which in no event shall exceed ten years from the date of grant (five years in the case of ISOs granted to certain ten percent stockholders of the Company). If the Administrator does not specify otherwise in an award agreement, upon termination of a participant's employment or other service to the Company, option and SAR awards shall expire (1) three months after the last day that the participant is employed by or provides services to the Company or any subsidiary (provided; however, that in the event of the participant's death during this period, those persons entitled to exercise the option or SAR pursuant to the laws of descent and distribution shall have one year following the date of death within which to exercise such option or SAR); (2) in the case of a participant whose termination of employment or services is due to death or disability (as defined in the applicable award agreement), 12 months after the last day that the participant is employed by or provides services to the Company or its subsidiary; and (3) immediately upon a participant's termination for "cause".

**Performance Based Compensation.**

The 2022 Plan provides for the grant of certain awards, the vesting or payment of which may be contingent on the satisfaction of certain performance criteria. Such performance-based awards are designed to be exempt from the limitations of Section 162(m) of the Code, as described below under "*Certain Federal Tax Consequences*." The maximum number of shares that may be issued to any single participant pursuant to options and SARs during the term of the 2022 Plan shall not exceed 2,824,000 shares. The maximum number of shares of common stock which may be delivered pursuant to other performance-based equity awards granted during the 162(m) Term (as defined below) may not exceed 750,000 shares, and the maximum amount of cash compensation payable pursuant to performance-based cash awards granted during the 162(m) Term (as defined below) may not exceed $1 million. The 162(m) Term is the period beginning on the effective date of the 2022 Plan and ending on the date of the first stockholder meeting that occurs in the fifth year following the year in which the Company's stockholders first approve this 2022 Plan (the "162(m) Term")

The 2022 Plan includes the following performance criteria that may be used by the Administrator when granting performance-based awards: (1) earnings per share, (2) cash flow (which means cash and cash equivalents derived from either (i) net cash flow from operations or (ii) net cash flow from operations, financing and investing activities), (3) total stockholder return, (4) price per share of common stock, (5) gross revenue, (6) revenue growth, (7) operating income (before or after taxes), (8) net earnings (before or after interest, taxes, depreciation and/or amortization), (9) return on equity, (10) capital employed, or on assets or on net investment, (11) cost containment or reduction, (12) cash cost per ounce of production, (13) operating margin, (14) debt reduction, (15) resource amounts, (16) production or production growth, (17) resource replacement or resource growth, (18) successful completion of financings, or (19) any combination of the foregoing.

**Fair Market Value**

Under the 2022 Plan, "Fair Market Value" means, unless otherwise determined or provided by the administrator in the circumstances, the closing price for a share of common stock on the trading day immediately before the grant date, as furnished by the OTC Markets (the "OTC Markets") or on the principal stock exchange on which the Common Stock is then listed for the date in question. If the Common Stock is no longer listed or is no longer actively traded on the OTC Markets or listed on a principal stock exchange as of the applicable date, the Fair Market Value of the Common Stock shall be the value as reasonably determined by the Administrator for purposes of the award in the circumstances.

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**Consideration for Awards**

The purchase price for any award granted under the 2022 Plan or the common stock to be delivered pursuant to any such award, as applicable, may be paid by means of any lawful consideration as determined by the Administrator, including, without limitation, one or a combination of the following methods:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• services rendered by the recipient of such award;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cash, check payable to the order of the Company, or electronic funds transfer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• notice and third party payment in such manner as may be authorized by the Administrator;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the delivery of previously owned and fully vested shares of common stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• by a reduction in the number of shares otherwise deliverable pursuant to the award; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• subject to such procedures as the Administrator may adopt, pursuant to a "cashless exercise" with a third party who provides financing for the purposes of (or who otherwise facilitates) the purchase or exercise of awards.

In the event that the Administrator allows a participant to exercise an award by delivering shares of common stock previously owned by such participant and unless otherwise expressly provided by the Administrator, any shares delivered which were initially acquired by the participant from the Company (upon exercise of a stock option or otherwise) must have been owned by the participant at least six months as of the date of delivery. Shares of common stock used to satisfy the exercise price of an option are valued at their fair market value on the date of exercise. The Company will not be obligated to deliver any shares unless and until it receives full payment of the exercise or purchase price for the shares and any related withholding obligations and any other conditions to exercise or purchase, as established from time to time by the Administrator, have been satisfied. Unless otherwise expressly provided in the applicable award agreement, the Administrator may at any time eliminate or limit a participant's ability to pay the purchase or exercise price of any award or shares by any method other than cash payment to the Company.

**Change in Control**

Upon a change in control, each then-outstanding option and SAR shall automatically become fully vested, all restricted shares then outstanding shall automatically fully vest free of restrictions, and each other award granted under the 2022 Plan that is then outstanding shall automatically become vested and payable to the holder of such award unless the Administrator has made appropriate provision for the substitution, assumption, exchange or other continuation of the award pursuant to the change in control. Notwithstanding the foregoing, the Administrator, in its sole and absolute discretion, may choose (in an award agreement or otherwise) to provide for full or partial accelerated vesting of any award upon a change in control (or upon any other event or other circumstance related to the change in control, such as an involuntary termination of employment occurring after such change in control, as the Administrator may determine), irrespective of whether such any such award has been substituted, assumed, exchanged or otherwise continued pursuant to the change in control.

For purposes of the 2022 Plan, "Change in Control" shall be deemed to have occurred if:

(i) a tender offer (or series of related offers) shall be made and consummated for the ownership of 50% or more of the outstanding voting securities of the Company, unless as a result of such tender offer more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to the commencement of such offer), and/or by any employee benefit plan of the Company or its subsidiaries, and their affiliates;

(ii) the Company shall be merged or consolidated with another entity, unless as a result of such merger or consolidation more than 50% of the outstanding voting securities of the surviving or resulting entity shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to such transaction), and/or by any employee benefit plan of the Company or its subsidiaries, and their affiliates;

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(iii) the Company shall sell substantially all of its assets to another entity that is not wholly owned by the Company, unless as a result of such sale more than 50% of such assets shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to such transaction), and/or by any employee benefit plan of the Company or its subsidiaries and their affiliates; or

(iv) a person shall acquire 50% or more of the outstanding voting securities of the Company (whether directly, indirectly, beneficially or of record), unless as a result of such acquisition more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to the first acquisition of such securities by such person), and/or by any employee benefit plan of the Company or its subsidiaries, and their affiliates.

Notwithstanding the foregoing, (1) the Administrator may waive the requirement described in paragraph (iv) above that a person must acquire more than 50% of the outstanding voting securities of the Company for a change in control to have occurred if the Administrator determines that the percentage acquired by a person is significant (as determined by the Administrator in its discretion) and that waiving such condition is appropriate in light of all facts and circumstances, and (2) no compensation that has been deferred for purposes of Section 409A of the Code shall be payable as a result of a change in control unless the change in control qualifies as a change in ownership or effective control of the Company within the meaning of Section 409A of the Code.

**Certain Federal Tax Consequences**

The following summary of the federal income tax consequences of the 2022 Plan. This summary does not purport to be complete, and does not discuss state, local or non-U.S. tax consequences.

***Nonqualified Stock Options***. The grant of a nonqualified stock option under the 2022 Plan will not result in any federal income tax consequences to the participant or to the Company. Upon exercise of a nonqualified stock option, the participant will recognize ordinary compensation income equal to the excess of the fair market value of the shares of common stock at the time of exercise over the option exercise price. If the participant is an employee, this income is subject to withholding for federal income and employment tax purposes. The Company is entitled to an income tax deduction in the amount of the income recognized by the participant, subject to possible limitations imposed by the Code, including Section 162(m) thereof. Any gain or loss on the participant's subsequent disposition of the shares will be treated as long-term or short-term capital gain or loss, depending on the sales proceeds received and whether the shares are held for more than one year following exercise. The Company does not receive a tax deduction for any subsequent capital gain.

***Incentive Options***. The grant of an ISO under the 2022 Plan will not result in any federal income tax consequences to the participant or to the Company. A participant recognizes no federal taxable income upon exercising an ISO (subject to the alternative minimum tax rules discussed below), and the Company receives no deduction at the time of exercise. In the event of a disposition of stock acquired upon exercise of an ISO, the tax consequences depend upon how long the participant has held the shares. If the participant does not dispose of the shares within two years after the ISO was granted, nor within one year after the ISO was exercised, the participant will recognize a long-term capital gain (or loss) equal to the difference between the sale price of the shares and the exercise price. The Company is not entitled to any deduction under these circumstances.

If the participant fails to satisfy either of the foregoing holding periods (referred to as a "disqualifying disposition"), he or she will recognize ordinary compensation income in the year of the disposition. The amount of ordinary compensation income generally is the lesser of (i) the difference between the amount realized on the disposition and the exercise price or (ii) the difference between the fair market value of the stock at the time of exercise and the exercise price. Such amount is not subject to withholding for federal income and employment tax purposes, even if the participant is an employee of the Company. Any gain in excess of the amount taxed as ordinary income will generally be treated as a short-term capital gain. The Company, in the year of the disqualifying disposition, is entitled to a deduction equal to the amount of ordinary compensation income recognized by the participant, subject to possible limitations imposed by the Code, including Section 162(m) thereof.

The "spread" under an ISO, i.e., the difference between the fair market value of the shares at exercise and the exercise price, is classified as an item of adjustment in the year of exercise for purposes of the alternative minimum tax. If a participant's alternative minimum tax liability exceeds such participant's regular income tax liability, the participant will owe the alternative minimum tax liability.

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***Restricted Stock***. Restricted stock is generally taxable to the participant as ordinary compensation income on the date that the restrictions lapse (i.e. the date that the stock vests), in an amount equal to the excess of the fair market value of the shares on such date over the amount paid for such stock (if any). If the participant is an employee, this income is subject to withholding for federal income and employment tax purposes. The Company is entitled to an income tax deduction in the amount of the ordinary income recognized by the participant, subject to possible limitations imposed by the Code, including Section 162(m) thereof. Any gain or loss on the participant's subsequent disposition of the shares will be treated as long-term or short-term capital gain or loss treatment depending on the sales price and how long the stock has been held since the restrictions lapsed. The Company does not receive a tax deduction for any subsequent gain.

Participants receiving restricted stock awards may make an election under Section 83(b) of the Code ("Section 83(b) Election") to recognize as ordinary compensation income in the year that such restricted stock is granted, the amount equal to the excess of the fair market value on the date of the issuance of the stock over the amount paid for such stock. If such an election is made, the recipient recognizes no further amounts of compensation income upon the lapse of any restrictions and any gain or loss on subsequent disposition will be long-term or short-term capital gain or loss to the recipient. The Section 83(b) Election must be made within 30 days from the time the restricted stock is issued.

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***Other Awards.*** Other awards (such as restricted stock units) are generally treated as ordinary compensation income as and when common stock or cash are paid to the participant upon vesting or settlement of such awards. If the participant is an employee, this income is subject to withholding for income and employment tax purposes. The Company is generally entitled to an income tax deduction equal to the amount of ordinary income recognized by the recipient, subject to possible limitations imposed by the Code, including Section 162(m) thereof.

***Section 162(m) of the Internal Revenue Code*.** Under Code Section 162(m), no deduction is allowed in any taxable year of the Company for compensation in excess of $1 million paid to the Company's "covered employees." A "covered employee" is the Company's chief executive officer and the three other most highly compensated officers of the Company other than the chief financial officer. An exception to this rule applies to "qualified performance-based compensation," which generally includes stock options and stock appreciation rights granted under a stockholder approved plan, and other forms of equity incentives, the vesting or payment of which is contingent upon the satisfaction of certain stockholder approved performance goals. The Company intends that the 2022 Plan allow for the grant of options and stock appreciation rights that may be treated as "qualified performance based compensation" that is exempt from the limitations of Code Section 162(m), and for the grant of other performance-based awards that may be treated as "qualified performance based compensation," but it makes no assurance that either such type of award will be so treated.

**NEW PLAN BENEFITS**

On August 8, 2022, the board of directors approved a grant of 60,000 shares of restricted common stock to a consultant. Additionally, each of the four non-employee directors is entitled to receive an award of 4,000 fully-vested shares of restricted common stock per month during the time serving as a director.

**SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS**

<u>Equity Compensation Plan Information</u>

The following table provides information as of December 31, 2021, regarding compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance.

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| | | | |
|:---|:---|:---|:---|
| **PLAN CATEGORY** | **Number of securities**<br> **to be issued upon**<br> **exercise of**<br> **outstanding options,**<br> **warrants and rights** | **Weighted average**<br> **exercise price of**<br> **outstanding**<br> **options, warrants**<br> **and rights** | **Number of securities remaining**<br> **available for future issuance**<br> **under equity compensation**<br> **plans**  |
| Equity compensation plans approved by security holders: |  | $- |  |
| Equity compensation plans not approved by security holders: |  | - |  |
| **Total** |  | $- |  |

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**CAPITALIZATION**

The following table shows our cash and cash equivalents and capitalization as of September 30, 2022:

● on an actual basis; and

● on an as adjusted basis giving effect to the sale of common stock in this offering and the receipt of net proceeds of approximately $___________ from this offering, after deducting underwriting commissions of $______ and estimated offering expenses payable by us of approximately $______ (assuming no exercise of the underwriters' option to purchase additional Notes).

You should read the data set forth in the table below in conjunction with "*Use of Proceeds*," appearing elsewhere in this prospectus.

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| | | |
|:---|:---|:---|
|  | **September 30, 2022** | **September 30, 2022** |
|  | **Actual** | **As Adjusted** |
|  | **(Unaudited)** | **(Unaudited)** |
| Cash and cash equivalents | $742087 |  |
| Indebtedness: |  |  |
| 7.25% Senior Secured Convertible Notes due 2024 | 57 |  |
| Revolving Convertible loan, net of discount | 132623 |  |
| Convertible Note Payable <sup>(1)</sup> | 1210000 |  |
| **Total Indebtedness** | **2516079** |  |
| Stockholder's Equity: |  |  |
| Common Stock, par value $0.001 per share, 65,000,000 shares authorized; 21,612,326 issued and outstanding shares actual and as adjusted | 21612 |  |
| Additional Paid-in Capital | 5479066 |  |
| Accumulated Deficit | (6576109) |  |
| **Total Stockholders' Equity** | (1075431) |  |
| **Total Capitalization** | (1075431) |  |

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(1) Represents advances under the Company's revolving convertible credit line with AEI Acquisition Company, LLC which were repaid in November 2022. Under the terms of the convertible credit line, the Company may borrow and AEI Acquisition Company, LLC may advance funds up to $1,500,000 to the Company which will be repaid from the proceeds of the offering and the convertible credit line terminated. As of the date of this prospectus no amounts are due under the convertible credit line.

The number of shares of common stock to be outstanding immediately after this offering is based on shares of common stock outstanding as of , 2023 includes 263,981 shares of common stock issuable upon conversion of $1,319,906 original principal amount of our 7.25% Notes at a conversion price of $5.00 per share, and excludes: (1) shares of common stock issuable upon exercise of warrants issuable in connection with this offering to the underwriters at an exercise price of $ per share; and (2) conversion of advances under the Company's revolving convertible credit line with AEI Acquisition Company, LLC. Under the terms of the convertible credit line, the Company may borrow and AEI Acquisition Company, LLC may advance funds up to $1,500,000 to the Company through June 1, 2023. The outstanding balance is convertible into shares of common stock at a rate equal to the lesser of (i) $1.50 per share or (ii) the closing price on the common stock on the primary trading market for our common stock on the day immediately preceding the date of conversion. On February 11, 2023, the convertible credit line was amended to provide for a fixed conversion rate of $1.50 per share on any amount of principal or interest converted. As of the date of this prospectus no amounts are due under the convertible credit line. Upon the closing of this offering, any amounts due under the convertible credit line will be paid in full from the proceeds and the credit line will be terminated.

Except as otherwise indicated, the discussion and the tables above assume no exercise of the underwriters' option to purchase additional shares of our common stock and excludes 2,824,000 shares of common stock available for future issuance under the Company's 2022 Plan.

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**DILUTION**

If you invest in our common stock in this offering, your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per share and the pro forma as adjusted net tangible book value per share of our common stock after this offering.

Our historical net tangible book value (deficit) as of September 30, 2022 was $(1.1) million, or $(0.05) per share of our common stock. Our historical net tangible book value (deficit) represents the amount of our total tangible assets less our total liabilities. Historical net tangible book value (deficit) per share represents historical net tangible book value (deficit) divided by the 21,612,326 shares of our common stock outstanding as of September 30, 2022.

After giving further effect to our issuance and sale of __________________ shares of our common stock in this offering, based upon the assumed initial public offering price of $______ per share, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us totaling approximately $____ million of net proceeds; our as adjusted net tangible book value as of September 30, 2022, would have been $___ million, or $_____ per share of common stock. This amount represents an immediate increase in pro forma as adjusted net tangible book value of $_____ per share to our existing stockholders and an immediate dilution in pro forma as adjusted net tangible book value of $____ per share to new investors purchasing shares of common stock in this offering. We determine dilution by subtracting the as adjusted net tangible book value per share after this offering from the amount of cash that a new investor paid for a share of common stock. The following table illustrates this dilution:

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| | | |
|:---|:---|:---|
| Assumed public offering price per share of common stock |  | $_____ |
| Historical net tangible book value (deficit) per share as of September 30, 2022 | $(1075431) |  |
| Increase in as adjusted net tangible book value per share attributable to investors in this offering | _____ |  |
| As adjusted net tangible book value per share after this offering |  |  |
| Dilution per share to new common stock investors in this offering |  | $_____ |

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If the underwriters exercise their option to purchase additional shares of our common stock in full, the pro forma as adjusted net tangible book value after the offering would be $____ per share, the increase in pro forma as adjusted net tangible book value per share to existing stockholders would be $____ per share and the dilution in pro forma as adjusted net tangible book value to new investors would be $____ per share.

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The following table summarizes, as of September 30, 2022, after giving effect to this offering, the number of shares of our common stock purchased from us, the total consideration paid, or to be paid, to us and the average price per share paid, or to be paid, by existing stockholders and by the new investors. The calculation below is based on an initial public offering price of $____ per share before deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Shares purchased** | **Shares purchased** | **Total consideration** | **Total consideration** | **Average price**<br> **per share** |
|  | **Number** | **Percentage** | **Amount** | **Percentage** |  |
| Existing Stockholders | 21612326 | 100% | $5537578 | 100% | $1.16 |
| New Investors |  |  |  |  |  |
| Total | 21612326 | 100% | $5537578 | 100% | $1.16 |

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The number of shares of common stock to be outstanding immediately after this offering is based on shares of common stock outstanding as of , 2023 includes 263,981 shares of common stock issuable upon conversion of $1,319,906 original principal amount of our 7.25% Notes at a conversion price of $5.00 per share, and excludes: (1) shares of common stock issuable upon exercise of warrants issuable in connection with this offering to the underwriters at an exercise price of $ per share; (2) conversion of advances under the Company's revolving convertible credit line with AEI Acquisition Company, LLC. and (3) 1,210,00 shares of common stock upon conversion of $1,210,000 of indebtedness incurred pursuant to a Purchase and Sale Agreement with Pure Oil & Gas, Inc. and ZQH Holding, LLC. Under the terms of the convertible credit line, the Company may borrow and AEI Acquisition Company, LLC may advance funds up to $1,500,000 to the Company through June 1, 2023. As of the date of this prospectus no amounts are due under the convertible credit line. The Company believes the seller failed to perform its obligations and disputes any obligation to pay the indebtedness under the Purchase and Sale Agreement with Pure Oil & Gas, Inc. and ZQH Holding, LLC.

Except as otherwise indicated, the discussion and the tables above assume no exercise of the underwriters' option to purchase additional shares of our common stock and excludes 2,824,000 shares of common stock available for future issuance under the Company's 2022 Plan.

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**MANAGEMENT**'**S DISCUSSION AND ANALYSIS OF**

**FINANCIAL CONDITION AND RESULTS OF OPERATION**

**Overview**

The Company was incorporated in the State of Colorado on September 26, 2013.

The following Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the reader understand our results of operations and financial condition. The MD&A is based on our unaudited data for the nine months ended September 30, 2022 and 2021 and summary balance sheet data at September 30, 2022 and December 31, 2021 derived from the consolidated financial statements included elsewhere in this prospectus. The unaudited consolidated interim financial statements discussed below have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, that the Company considers necessary for a fair statement of the financial information set forth in those statements. The results of operations for the periods discussed below are not necessarily indicative of the results to be expected for any future period and the results for any interim period are not necessarily indicative of the results that may be expected for a full year. The MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and notes thereto included in Item 8 - Financial Statements and Supplementary Data.

**Results of operations** 

***For the Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021***

We generated revenues of $144,139 and $2,369 during the nine months ended September 30, 2022 and 2021. Lease operating expenses were $278,533 and $7,303 during the nine months ended September 30, 2022 and 2021, respectively. The increase in oil and natural gas sales and lease operating expenses was due to an increase in Alpha Energy Texas operations. Total operating expenses were $1,010,921 during the nine months ended September 30, 2022 compared to $625,965 during the same period in 2021. The increase in operating expenses was due to a $240,113 increase in professional fees and $48,593 increase in general administrative expenses which were offset by $24,000 decrease in board of director fees and a $120,250 gain on settlement of accounts payable in 2021.

***For the Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020***

During the years ended December 31, 2021 and 2020, the Company had minimal revenues from its operating activities. In part, because such activities were focused on identifying potential opportunities and properties.

During the year ended December 31, 2021, the Company recognized a net loss of $1,070,738 compared to $1,986,978 for the year ended December 31, 2020. The decrease of $916,240 was primarily a result of a decrease in impairment expense of $1,000,000, a decrease in interest expense of $107,768, decrease in board of director fees of $16,000 which were offset by an increase in gain on settlement of accounts payable of $120,250, increase in loss on change in fair value of derivative liabilities of $8,081 and an increase in general and administrative costs of $289,183.

***Liquidity and Capital Resources***

Overview –

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt services, acquisitions, contractual obligations and other commitments. As of the date of this prospectus, we have yet to generate meaningful revenue from our business operations and have funded acquisitions, capital expenditure and working capital requirement through equity and debt financing.

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As of September 30, 2022, we had total current assets of $825,027 and total current liabilities of $2,091,465. We have historically funded our operations from lines of credit, sales of equity securities, loans and advances, including from related parties. We expect the proceeds from this offering to provide working capital for a period of at least twelve months from the date of this prospectus, including repayment of any indebtedness under our convertible credit line with a related party, if any, upon closing of the offering.

Following September 30, 2022, our revenues have been inadequate to cover our operating costs. Accordingly, we expect we will be dependent on obtaining capital from external sources to fund our operations over the next two to three years. Although we have been successful in raising capital in the past, financing may not be available on terms favorable to us, if at all, so we may not be successful in obtaining additional financing. Therefore, it is not considered probable, as defined in applicable accounting standards, that our plan to raise additional capital will alleviate the substantial doubt regarding our ability to continue as a going concern.

Cash Flows –

The following table summarizes our cash flows from operating, investing and financing activities for the periods presented.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Nine months Ended<br> September 30 | Nine months Ended<br> September 30 | Year Ended<br> December 31 | Year Ended<br> December 31 |
|  | 2022 | 2021 | 2021 | 2020 |
| Net cash used in operating activities | (1122354) | (281298) | (356892) | (109394) |
| Net cash used in investing activities | (1220512) | (60000) | (95791) | (30000) |
| Net cash provided by financing activities | 3084736 | 342200 | 452900 | 139394 |

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Cash flows from operating activities

Our cash flows used in operating activities to date have been primarily comprised of costs related to pursuing acquisitions and general and administrative activities as a result of operating as a public company, which we expect to increase.

Net cash used in operating activities was $1,122,354 and $281,298 for the nine months ended September 30, 2022 and 2021, respectively. The increase in net cash flows used in operating activities as compared to the same period in 2021 is primarily driven by our signing of the Logan 1 acquisition in March 2022 and preparation for oil and natural gas related production activities thereafter.

Net cash used in operating activities was $356,892 for the year ended December 31, 2021, compared to $109,394 for the year ended December 31, 2020. The increase in net cash flows used in operating activities as compared to the same period in 2021 is primarily driven by our increase in general and administrative expenses.

Cash flows from investing activities

Our cash flows from investing activities have been comprised primarily of purchases of equipment and installation of improvements to our leased facilities.

Net cash used in investing activities was $1,220,512 and $60,000 for the nine months ended September 30, 2022 and 2021, respectively. The increase was primarily due to the acquisition of oil and natural gas property during the nine months ended September 30, 2022.

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Net cash used in investing activities was $95,791 for the year ended December 31, 2021, compared to $30,000 for the year ended December 31, 2020. The increase was primarily due to option payments to Progressive Well Service, LLC during the year ended December 31, 2021.

Cash flows from financing activities

We have financed our operations primarily through sales of equity securities, loans and advances, including from related parties.

Net cash provided by financing activities was $3,084,736 and $342,200 for the nine months ended September 30, 2022 and 2021, respectively. The increase is comprised of $120,236 in proceeds from advances, from related parties, $500,000 from senior secured convertible notes payable from related party and $2,504,500 in proceeds from the sale of common stock, which were offset by repayments on the Convertible Credit Line of $30,000 and $10,000 repayments of advances, related party. The Company generated cash of $342,200 from financing activities during the nine months ended September 30, 2021 which consisted of $317,200 advances, related party, related party, $20,000 in proceeds from convertible credit line payable, related party and $5,000 in proceeds from the sale of common stock.

Net cash provided by financing activities was $452,900 for the year ended December 31, 2021, which consisted of proceeds of $427,900 from advances, related parties, $20,000 of proceeds from the convertible credit line, related party and $5,000 from the sale of common stock.

Net cash provided by financing activities for the year ended December 31, 2020 was $139,394, which consisted of proceeds of $96,000 from advances, related parties, $65,000 in proceeds from note payable, related party, $8,500 of proceeds from the convertible credit line, related parry and $75,000 from the sale of common stock partially offset by $100,000 payments on short term note, $4,250 payments on convertible credit line, related party and $856 payment on short term advances from related parties .

On June 1, 2021, the Company entered into a convertible credit line with a related party, AEI Acquisition Company, LLC, the beneficial owner of 74% of the Company's common stock, which provides for up to $1,500,000 of advances. The outstanding principal amount accrues interest at a rate of 7% per annum and is convertible into shares of common stock at a rate equal to the lesser of (i) $4.00 per share or (ii) the closing price on the common stock on the primary trading market for our common stock on the day immediately preceding the date of conversion. On February 11, 2023, the convertible credit line was amended to provide for a fixed conversion rate of $1.50 per share on any amount of principal or interest converted. Under the terms of the convertible credit line, the Company may borrow and AEI Acquisition Company, LLC may advance funds through closing of the offering. The outstanding principal balance on the convertible credit line as of December 31, 2021 and 2020 was $168,328 and $148,328, respectively, and the principal amount outstanding as of February 12, 2023 was $0. The amount of principal paid under the convertible credit line during fiscal year 2021 and 2020, was $0 and $4,250, respectively. The amount of interest paid during fiscal year 2021 and 2020, respectively was $0 and $0 and the applicable interest rate was 7% per annum. Upon the closing of this offering, any amounts due under the convertible credit line will be paid in full from the proceeds and the credit line will be terminated.

On December 31, 2022, the Company and 20 Shekels, Inc. an affiliate of our President Jay Leaver, and AEI Management, Inc., an affiliate of our majority stockholder, AEI Acquisition Company, LLC., entered into Exchange Agreements (the "Exchange Agreements") with respect to certain outstanding indebtedness of the Company. Under the Exchange Agreements, the Company's previously issued 7.25% Senior Secured Notes due February 22, 2024 to affiliates of Mr. Leaver (which were assigned to 20 Shekels, Inc. a corporation wholly-owned by Marshwiggle, LLC, a limited liability company jointly owned by Mr. Leaver and his spouse) and to AEI Management, Inc. were amended and restated and the Contractual Investment Agreements ("CIA") entered with the Company and related agreements were terminated and replaced with the new 7.25% Senior Secured Note Purchase Agreement agreements and the new 7.25% Transaction Documents. Under the terms of the Exchange Agreements, 20 Shekels, Inc. was issued a $906,754 principal amount 7.25% Note and AEI Management, Inc. was issued a $413,206 principal amount 7.25% Note. As a result of the amendments, the holders and the Company amended and restated the terms of the contractual agreements governing 7.25% Notes in order to, among other things, extend the maturity date to December 31 2024 and limit the scope of the collateral pledged to assets acquired on March 9, 2022 (34 well bores and related assets) under the Purchase and Sale Agreement with Progressive Well Service, LLC on the Cherokee Uplift in Central Oklahoma for the Logan 1 Assets. In addition, AEI Management, Inc. was appointed collateral agent for 7.25% Notes, the CIAs were terminated, and the parties agreed to various representations and warranties, covenants, and conditions, as provided in the new 7.25% Transaction Documents and released all prior obligations under the CIA and related agreements.

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Quantitative and Qualitative Disclosures about Market Risk

We are exposed to a variety of market and other risks including credit risks, the market price for oil and natural gas and transaction risks as well as risks relating to the availability of funding sources, hazard events and specific asset risks.

*Going Concern*

The continuation of the Company as a going concern is dependent upon our ability to obtain continued financial support from its stockholders, necessary equity financing to continue operations and the attainment of profitable operations. As of September 30, 2022, the Company has incurred an accumulated deficit of $6,576,109 since inception and had not yet generated any revenue from operations. Additionally, management anticipates that its cash on hand as of September 30, 2022 is sufficient to fund its planned operations into but not beyond one year from the date of the issuance of these financial statements. The Company's continuing losses from operations and net capital deficiency raise substantial doubt regarding our ability to continue as a going concern.

We will have additional capital requirements for 2023 and beyond. We may need to seek additional financing, which may or may not be available to us, while we attempt to raise additional capital through the sale of our common stock pursuant to this offering.

***Off-Balance Sheet Arrangements***

None.

***Contractual Obligations***

The Company, through its wholly-owned subsidiary Alpha Energy Texas Operating LLC, or ETC, is a party to a Crude Oil Purchase Agreement with Energy Transfer Crude Marketing LLC, dated June 7, 2022, pursuant to which the Company sells to ETC all crude oil produced from the Logan Project. The price for the crude oil based on the weighted average price of West Texas Intermediate crude for the trade month, and valued in the trade as Sunoco OK SW crude. The term of the Agreement is month-to-month and may be terminated by either party upon 30 days advance written notice.

The Company is a party to a Gathering and Processing Agreement with ETC Pipeline, Ltd., dated August 1, 2022, pursuant to which ETC Pipeline LTD provides certain gathering, processing and related services with respect to gas produced by the Company. The Agreement provides that the fees for such services will be set forth in a transaction confirmation to be entered into with respect to the provision of specific services. The term of the Agreement is month-to-month and may be terminated by either party upon 60 days advance written notice.

***Significant Accounting Policies***

For a discussion of our significant accounting policies please see Note 1 to the audited financial statements included as part of this report. Management determined there were no critical accounting policies.

***Critical Accounting Estimates***

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets, liabilities and contingencies at the date of the financial statements as well as the reported amounts of expenses during the reporting period. As a result, management is required to routinely make judgments and estimates about the effects of matters that are inherently uncertain. Actual results may differ from these estimates under different conditions or assumptions. Management determined there were no critical accounting estimates

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**BUSINESS**

**Industry Background** 

***Overview***

Alpha Energy, Inc. ("our", "we", the Company) was incorporated in September 26, 2013 in the State of Colorado for the purpose of purchasing, developing and operating oil and natural gas leases.

On February 23, 2018, the Company formed a wholly owned subsidiary, Alpha Energy Texas Operating, LLC ("AETO"). The business of AETO is to maximize production and cash flow from our properties and use that cash flow to explore, develop, exploit and acquire oil and natural gas properties across Texas, Oklahoma and New Mexico. AETO is bonded and insured as an operator in the State of Oklahoma.

On March 9, 2022, we closed on the acquisition of working interests and net revenue interests in leases located in Logan County, Oklahoma, as well 34 well bores and related assets, production equipment (tank batteries, pumping units, pipelines) and related assets under a Purchase and Sale Agreement with Progressive. entered on February 17, 2022, located in Logan County, Oklahoma. A working capital interest represents the percentage of costs that we are obligated to pay and net revenue interest represents the percentage of revenue that we will earn from production. In most cases we are responsible for 100% of the working interest and are entitled to receive between 75% and 78% of the production revenue from the Logan Project, with the remainder going to the lessor as an overriding royalty interest per standard oil and natural gas lease terms in this area. Under the Purchase and Sale Agreement, we are entitled to receive the proceeds of production from January 1, 2022 and Progressive was required to operate the properties and transfer ownership and royalty decks to Company following a one-month transition period. Under the Purchase and Sale Agreement, the Company made an additional cash payment to Progressive of $490,000.00 after giving effect to $110,000.00 previously paid in option extension payments under the Option Agreement. The Company is also obligated under the Purchase and Sale Agreement to make a further payment of 3% percent of the net revenue from new wells drilled until Progressive receives an additional $350,000, of which $0 has been paid as of September 30, 2022.

The well bores acquired consist of developed and undeveloped proven production on the Cherokee Uplift in Central Oklahoma. AETO is listed as Operator of 31 of the original 34 wellbores acquired under the terms of the Purchase and Sale Agreement. Two of the 31 wells are on the state's "Plug or Produce" list, which are wells that are not currently active and which the state has demanded either be put into production or responsibly plugged and abandoned in accordance with applicable regulation. We have reviewed these two wells and have informed the state we will plug them in the first quarter of 2023. Five wells were producing upon acquisition of the Project. We have attempted to restart an additional ten wells so far, with five being successful and five producing uneconomic volumes of water for a total of ten wells currently producing. We have added perforations in the primary producing horizon (Mississippian Lime) in three wells and may attempt hydraulic fracture treatment on one or more of them. We attempted new perforations targeting two behind-pipe zones in one well but were not able to establish production from either zone. We have other behind pipe opportunities (which are zones in a well bore that data indicate should produce hydrocarbons but which have not yet been tested) for which we have applied for necessary Location Exceptions per regulatory requirements and we intend to exploit those opportunities upon approval. We have conducted a preliminary geologic overview of the available data for the remaining wells and identified possible behind pipe opportunities. We have engaged qualified reservoir engineers and are in the process of examining best practices and economics of accessing these zones. We intend to attempt several more recompletions in the second through fourth quarters of 2023. This will include hydraulic stimulation of existing perforations in the Mississippian Lime. Wells that are not currently producing and do not appear to be good candidates for recompletion will need to be plugged and abandoned. We anticipate being able to make such decisions by the end of 2023.

To modernize operations, we have enlisted the services of an environmental engineer to ensure that the Company has a proper Spill Prevention, Containment, and Control plan ("SPCC") in place for each of our facilities. We have begun the process of meeting their recommendations. We are researching converting one of our existing wells for saltwater disposal. This may permit us to operate wells that are currently uneconomic because we currently truck the produced wastewater off site for disposal in commercial facilities. A significant amount of saltwater is produced along with oil and natural gas and current methods of disposal are costly. We also are researching a pipeline system to reduce the number of water trucks visiting the well sites every week and examining the economics of converting our active pumping units to electrical pumps. This would enable us to sell more natural gas (some of which is currently used to run the pumping equipment) and reduce the workload on our pumper personnel because we could control well production remotely.

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Oil and natural gas leases provide the Company the ability to produce oil and natural gas on its production sites. The leases customarily are for a term of three years and as long thereafter as oil and natural gas is produced; and provide for continuing royalty payments of between 1/8% – 1/4%. The Company believes it possesses appropriate rights under all leases for its current production, however lease defects or disputes may exist or arise in the future which could result in costs to the Company to rectify or result in the Company incurring additional payments to lessors. Due to the fractionalization of the mineral interests under our leases that allow for operations and the necessity of acquiring the lease rights from hundreds of said mineral owners, we believe that no one lease is material to our strategy.

***Impact of COVID-19 Pandemic***

Over the past two years the impact of COVID-19 has had adverse effects on our business by slowing down our ability to work with third parties. We have witnessed supply chain related delays and increasing costs due to pandemic related inflation. It is difficult to predict what other adverse effects, if any, COVID-19 and related matters can have on our business, or against the various aspects of same.

The COVID-19 pandemic could further negatively impact our business or results of operations through the temporary closure of our operating locations or those of our customers, contractors or suppliers. In addition, the ability of our employees, contractors and our suppliers' and customers' employees to work may be significantly impacted by individuals contracting or being exposed to COVID-19, or as a result of prevention and control measures, which may significantly hamper our production throughout the supply chain and constrict sales channels.

It is difficult to isolate the impact of the pandemic on our business, results of operations, financial condition and our future strategic plans.

We may experience long-term disruptions to our operations resulting from changes in government policy or guidance; quarantines of employees, customers and suppliers in areas affected by the pandemic and the presence of new variants of COVID-19; and closures of businesses or facilities critical to our business or supply chains. We are actively monitoring, and will continue to actively monitor, the pandemic and the potential impact on its operations, financial condition, liquidity, suppliers, industry and workforce.

For a further discussion of the impact of the COVID-19 pandemic on our business, please see "*Management*'*s Discussion and Analysis of Financial Condition and Results of Operations - Impact of COVID-19 Pandemic*".

***Our Strategy***

Our long-term business strategy is:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*•Pursuing accretive, opportunistic acquisitions that meet our strategic and financial objectives.* We believe that there is currently a window of opportunity for us to acquire Proved Developed Producing "(PDP") heavy assets (wells that have been drilled and equipped and are producing marketable hydrocarbons) that also possess sizable undeveloped acreage positions from distressed and/or motivated sellers at an attractive discount to PDP PV-10 valuations. PV-10 is a metric of the time value of money commonly used in oil industry transactions. It represents the net present value of an expected cash flow, discounted at 10% (i.e., the equivalent cash right now that would equal the value of the contemplated cash flow compared to a generic investment earning 10%). Generally, a positive PV-10 may be worth pursuing, while a negative PV-10 is not. Consequently, we currently intend to focus our growth efforts on identifying, evaluating and pursuing the acquisition of such oil and natural gas properties in areas where we currently have a presence and/or specific operating expertise that will position us to enhance our expected acquisition returns through leveraging our operational experience and expertise in order to provide productivity and cost improvements, and where appropriate, increase reserves through development drilling. We may acquire individual properties or private or publicly traded companies, in each case for cash, common stock, preferred stock or a combination thereof. We believe that the historical low commodity pricing environment, and very limited sources of debt and/or equity capital available to our industry, provides significant reserve and cash flow growth opportunities for us.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*•Enhancing our existing portfolio by dedicating the majority of our drilling capital to our existing portfolio of oil and liquids-rich opportunities*. A key element of our long-term strategy is to continue to develop the oil and natural gas liquids resource potential that we believe exist in numerous formations and to expand our presence in those areas. At this time, we have secured the rights to one development property in the Cherokee uplift, a well-known area with existing equipment and infrastructure and are in the process of modernizing their operations for current revenue generation. In response to the current opportunity to be an asset consolidator in the industry, we plan to limit near-term drilling capital for the foreseeable future to that necessary to fulfill leasehold commitments, preserve core acreage, and where the opportunity exists, to drill where we can add production and cash flow at attractive rates of return. We will, however, continue to evaluate high quality drilling opportunities that have the potential to add significant reserves and cash flow to our portfolio at low finding and development cost, thereby providing returns superior to those generated in the currently active unconventional resource plays. Discuss intended modernization steps and recompletions and reworks.

Our strategy is to acquire and develop additional properties we can restart, rework, and/or recomplete through cash and/or equity transactions. Our strategy is to acquire and develop additional producing properties in the vicinity of the Cherokee Uplift similar to our existing Logan Project that we can restart, rework, recomplete, and which have proven un-drilled potential to produce oil and natural gas.. In this manner, our strategy involves acquiring existing infrastructure from historic operations. Deployment of current modern technology to enhance recompletions and drilling in previously undeveloped or underdeveloped areas is part of our strategy to enhance the value of acquired properties.

We will continue to conduct the foregoing activities with the proceeds from this offering while seeking new acquisition candidates for our strategy. Our management's years of experience and knowledge of the oil and natural gas industry lead us to believe that there are an abundance of additional good prospects available where operations were suspended or assets seized by lenders during prior oil and natural gas price declines that made those fields uneconomical that have either been overlooked or are not big enough for larger companies to pursue. In the process of identifying these prospects, we will utilize the expertise of our team and outsource to the highest caliber contract engineering firms available to evaluate and develop our prospects.

***Production and Reserve Overview***

Prior to closing of the Logan Project on March 9, 2022, the Company engaged Liquid Gold Technologies, Inc. ("LGT") to evaluate and deliver a Certified SEC Reserves and Valuation Report of the Logan Project. On February 15, 2022, but effective January 1, 2022, LGT delivered the report (the "LGT Report"). LGT utilized publicly available data and data provided to the Company by Progressive.

According to the LGT Report, the project contains proven net reserves (including producing and non-producing) of 827,780 mcf of gas and 92,590 barrels of oil/condensate with an SEC PV-10 of $5,421,530 based on trailing twelve-month commodity prices of $65.27/bbl oil and $3.708/mbtu natural gas. In addition, the Logan Project contained additional probable net reserves (all non-producing or undeveloped) of 3,705,270 mcf of gas and 1,166,820 barrels of oil/condensate with an additional SEC PV-10 of $43,448,470. Total PV-10% Proved plus Probable using SEC approved pricing parameters was $48,870,000.

After closing of the Logan Project, it was determined that Progressive could not deliver the full list of leases listed in the Purchase and Sale Agreement. The Company again engaged LGT to provide an updated report based on the actual leases in hand and better information supplied by the Company on actual well production. On July 27, 2022, but effective July 1, 2022, LGT delivered the report (the "Updated Report"). In the six-month span from the initial report, trailing twelve-month pricing had improved to $85.02/bbl oil and $5.362/mbtu natural gas. Factors affecting the changes in the report valuation include: (i) increased prices, (ii) decreased number of leases (affecting primarily the Company's interest in planned to be drilled wells), and (iii) increased appreciation for Behind Pipe potential (both Proven and Probable).

According to the Updated Report, the Logan Project contained proven net reserves (including producing and non-producing) of 476,820 mcf of gas and 100,510 barrels of oil/condensate with an SEC PV-10 of $6,126,320 based on trailing twelve-month commodity prices of $85.02/bbl oil and $5.362/mbtu natural gas. In addition, the Logan Project contained additional probable net reserves (all non-producing or undeveloped) of 2,473,130 mcf of gas and 780,290 barrels of oil/condensate with an additional SEC PV-10 of $31,510,270. Total PV-10% Proved plus Probable using SEC approved pricing parameters was $37,636,590.

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In the time since closing of the Logan Project, the Company has been engaged in an active leasing and quiet title program to recover the leases that had lapsed or were otherwise not conveyable by Progressive per the terms of the Purchase and Sale Agreement. An additional five wells have been restarted, raising the total number of producing wells in the field to ten, with a concomitant production increase over the last quarter of 2022.

The Company sells oil and natural gas on the spot market. It does not have a contractual price nor any delivery commitments. The Company does not have any hedges currently in place. It will explore these and other options for selling its product once volumes have increased.

The Company uses Liquid Gold Technologies Corporation ("LGT") for annual reserve estimates according to SEC guidelines. LGT is certified to perform such estimates. The Company uses their reports as a guide for size and timing of planned expenditures. It should be noted on the most recent report that the size of the reserves is largely determined by yet-to-be-drilled horizontal wells in the Woodford Shale. The upside potential provided by the Woodford opportunity drove the decision to purchase this project, rather than the known low, late-stage production from the existing wells.

***Geological and geophysical***

We may engage detailed geological interpretation combined with advanced seismic exploration techniques to identify the most promising drilling sites within our leases. Drilling fresh wells without guidance of seismic may risk drilling into an unknown fault zone and potentially losing the well in the event circulation is lost and cannot be restored. 3D seismic is especially important for guiding laterals of a horizontal drilling program: without seismic guidance, there is an increased risk of either running into a fault or simply straying out of the optimal pay zone, resulting in a sub-par or possibly sub-economic well. Additionally, advanced geostatistical techniques enable 3D seismic and modern downhole logs to be used to more accurately map reservoirs and reservoir compartments. The Company is reviewing the cost of 3D seismic, both in terms of dollars and time, to determine whether it is prudent to acquire a survey prior to drilling up to eight horizontal Woodford laterals. With the relatively small acreage block in the Logan Project, we may not be able to permit a large enough survey to acquire good data.

Geological interpretation is based upon data recovered from existing oil and natural gas wells in an area and other sources. Such information is either purchased from the company that drilled the wells or becomes public knowledge through state agencies after a period of years. Through analysis of rock types, fossils and the electrical and chemical characteristics of rocks from existing wells, we can construct a picture of rock layers in the area. We will have access to the well logs and decline curves from existing operating wells. Well logs allow us to calculate an original oil or gas volume in place while decline curves from production history allow us to calculate remaining proved producing reserves.

***Market for Oil and Natural Gas Production***

The market for oil and natural gas production is regulated by both the state and federal governments. Although the overall market is mature, producers are able to market their oil and natural gas through negotiations with purchasers in the area . The purchasers in the area will purchase all crude oil offered for sale at posted field prices, subject to adjustments for quality differences, volume incentives and other variances. The price adjustments for quality differences are based on the benchmark which is Saudi Arabian light crude oil on which Organization of the Petroleum Exporting Countries ("OPEC") price changes have been based. Quality variances from benchmark crude may result in lower prices being paid for the variant oil. Oil sales are normally contracted with a purchaser or gatherer as it is known in the industry who will pick up the oil at the well site. In some instances, there may be deductions for transportation from the well head to the sales point. At this time, the majority of crude oil purchasers do not charge transportation fees unless the well is outside their service area. The purchaser or oil gatherer will sometimes handle check disbursements to both the working interest and royalty owners. If the purchasers will not handle the check disbursements (as is the case at the Logan Project), we will have to do so or contract with a third party to handle the payments and processing, we are a working interest owner. By being a working interest owner, we are responsible for the payment of our proportionate share of the operating expenses of the well. Royalty owners and overriding royalty owners receive a percentage of gross oil production from a well and are not obligated in any manner whatsoever to pay for the costs of operating the lease. Therefore, we will be paying the expenses for the oil and natural gas revenues paid to the royalty and overriding royalty interests. This is standard procedure in the industry.

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Gas sales are made by contract. The gas purchaser will pay the well operator 100% of the sales proceeds on or about the 25th of each and every month for the previous month's sales. The operator is usually responsible for all checks and distributions to the working interest and royalty owners. There is no standard price for gas. Price will fluctuate with the seasons and the general market conditions. As our production levels grow, we intend to enter into price risk management financial instruments (derivatives) to reduce our exposure to short-term fluctuations in the price of natural gas and oil and to protect our return on investments. The derivative contracts apply only to a portion of our natural gas and oil production, provide only partial price protection against declines in natural gas and oil prices and may limit the benefit of future increases in natural gas and oil prices. We do not anticipate any significant change in the manner production is purchased; however, no assurance can be given at this time that such changes will not occur.

The Company, through its wholly-owned subsidiary, AETO , is a party to a Crude Oil Purchase Agreement with Energy Transfer Crude Marketing LLC, or ETC, dated June 7, 2022, pursuant to which the Company sells to ETC all crude oil produced from the Logan Project. The price for the crude oil based on the weighted average price of West Texas Intermediate crude for the trade month, and valued in the trade as Sunoco OK SW crude. The term of the agreement is month-to-month and may be terminated by either party upon 30 days advance written notice.

The Company is a party to a Gathering and Processing Agreement with ETC Pipeline, Ltd., dated August 1, 2022, pursuant to which ETC Pipeline LTD provides certain gathering, processing and related services with respect to gas produced by the Company. The agreement provides that the fees for such services will be set forth in a transaction confirmation to be entered into with respect to the provision of specific services. The term of the Agreement is month-to-month and may be terminated by either party upon 60 days advance written notice.

**Seasonality**

Winter weather conditions and lease stipulations can limit or temporarily halt the drilling and producing activities of our operating partners and other oil and natural gas operations. These constraints and the resulting shortages or high costs could delay or temporarily halt the operations of our operating partners and materially increase our operating and capital costs. Such seasonal anomalies can also pose challenges for meeting well drilling objectives and may increase competition for equipment, supplies and personnel during the spring and summer months, which could lead to shortages and increase costs or delay or temporarily halt our operating partners' operations.

**Insurance**

We maintain insurance coverage at levels and on terms and conditions that we believe to be customary in the oil and natural gas industry. We maintain coverage for commercial general, automobile, and umbrella insurance up to $3,000,000 and for well control, $5,000,000.

***Competition***

The oil and natural gas industry is highly competitive. Our competitors and potential competitors include major oil companies and independent producers of varying sizes which are engaged in the acquisition of producing properties and the exploration and development of prospects. Most of our competitors have greater financial, personnel and other resources than we do and therefore have greater leverage in acquiring prospects, hiring personnel and marketing oil and natural gas. In addition, larger companies operating in the same area may be willing or able to offer oil and natural gas at a lower price.

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We compete in Oklahoma with over 500 independent companies and approximately 40 significant independent operators including Marathon Oil, Devon Energy, Pioneer Natural Resources, and Mewbourne Oil Company in addition to over 450 smaller operations with no single producer dominating the area. Major operators such as ExxonMobil, Shell Oil, ConocoPhillips, and others that are considered major players in the oil and natural gas industry retain significant interests in Oklahoma.

We believe that we can successfully compete against other independent companies by utilizing the expertise of our staff and consultants familiar with the structures to be developed, maintaining low corporate overhead and otherwise efficiently developing current lease interests.

***Government Regulation***

The production and sale of oil and natural gas is subject to regulation by state, federal and local authorities. There are statutory provisions regulating the production of oil and natural gas under which administrative agencies may set allowable rates of production and promulgate rules in connection with the operation and production of such wells, ascertain and determine the reasonable market demand of oil and natural gas, and adjust allowable rates with respect thereto.

The sale of liquid hydrocarbons was subject to federal regulation under the Energy Policy and Conservation Act of 1975 which amended various acts, including the Emergency Petroleum Allocation Act of 1973. These regulations and controls included mandatory restrictions upon the prices at which most domestic and crude oil and various petroleum products could be sold. All price controls and restrictions on the sale of crude oil at the wellhead have been withdrawn. It is possible, however, that such controls may be re-imposed in the future but when, if ever, such reimposition might occur and the effect thereof is unknown.

Our operations are subject to extensive and continually changing regulation because of legislation affecting the oil and natural gas industry is under constant review for amendment and expansion. Many departments and agencies, both federal and state, are authorized by statute to issue and have issued rules and regulations binding on the oil and natural gas industry and its individual participants. The failure to comply with such rules and regulations can result in large penalties. The regulatory burden on this industry increases our cost of doing business and, therefore, affects our profitability. However, we do not believe that we are affected in a significantly different way by these regulations than our competitors are affected.

***Transportation and Sale***

We can make sales of oil, natural gas and condensate at market prices, which are not subject to price controls at this time. The price that we receive from the sale of these products is affected by our ability to transport and the cost of transporting these products to market. Under applicable laws, FERC regulates:

● the construction of natural gas pipeline facilities, and

● the rates for transportation of these products in interstate commerce.

Our possible future sales of natural gas are affected by the availability, terms and cost of pipeline transportation. The price and terms for access to pipeline transportation remain subject to extensive federal and state regulation. Several major regulatory changes have been implemented by Congress and FERC from 1985 to the present. In addition, Federal regulation to improve the safety of existing pipeline infrastructure by replacement could increase the cost of interstate transportation. FERC's 2022 review of its policies relating to natural gas pipeline infrastructure could ultimately increase the cost of approving new interstate capacity or delay new interstate capacity being constructed. These changes affect the economics of natural gas production, transportation and sales. FERC is continually proposing and implementing new rules and regulations affecting these segments of the natural gas industry that remain subject to FERC's jurisdiction. The most notable of these are natural gas transmission companies.

Effective as of January 1, 1995, FERC implemented regulations establishing an indexing system for transportation rates for oil. These regulations could increase the cost of transporting oil to the purchaser. We do not believe that these regulations will affect us any differently than other oil producers and marketers with which we compete. FERC does not regulate the construction of oil and natural gas liquids pipeline facilities, which is left to the states.

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***Drilling and Production***.

Our anticipated drilling and production operations are subject to regulation under a wide range of state and federal statutes, rules, orders and regulations. Among other matters, these statutes and regulations govern:

● the amounts and types of substances and materials that may be released into the environment;

● the discharge and disposition of waste materials,

● the reclamation and abandonment of wells and facility sites, and

● the remediation of contaminated sites, and require:

● permits for drilling operations,

● drilling bonds, and

● reports concerning operations.

***Environmental Regulations***

**General.** Our operations are affected by various state, local and federal environmental laws and regulations, including the:

● Clean Air Act,

● Oil Pollution Act of 1990,

● Federal Water Pollution Control Act,

● Resource Conservation and Recovery Act ("RCRA"),

● Toxic Substances Control Act, and

● Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA").

These laws and regulations govern the discharge of materials into the environment or the disposal of waste materials, or otherwise relate to the protection of the environment. In particular, the following activities are subject to stringent environmental regulations:

● drilling,

● development and production operations,

● activities in connection with storage and transportation of oil and other liquid hydrocarbons, and

● use of facilities for treating, processing or otherwise handling hydrocarbons and wastes.

Violations are subject to reporting requirements, civil penalties and criminal sanctions. As with the industry generally, compliance with existing regulations increases our overall cost of business. The increased costs cannot be easily determined. Such areas affected include:

● unit production expenses primarily related to the control and limitation of air emissions and

● the disposal of produced water,

● capital costs to drill exploration and development wells resulting from expenses primarily related to the management and disposal of drilling fluids and other oil and natural gas exploration wastes, and

● capital costs to construct, maintain and upgrade equipment and facilities and remediate, plug and abandon inactive well sites and pits.

Environmental regulations historically have been subject to frequent change by regulatory authorities. Therefore, we are unable to predict the ongoing cost of compliance with these laws and regulations or the future impact of such regulations on our operations.

A discharge of hydrocarbons or hazardous substances into the environment could subject us to substantial expense, including both the cost to comply with applicable regulations pertaining to the cleanup of releases of hazardous substances into the environment and claims by neighboring landowners and other third parties for personal injury and property damage. We do not maintain insurance for protection against certain types of environmental liabilities.

The Clean Air Act requires or will require most industrial operations in the United States to incur capital expenditures in order to meet air emission control standards developed by the EPA and state environmental agencies. Although no assurances can be given, we believe the Clean Air Act requirements will not have a material adverse effect on our financial condition or results of operations.

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RCRA is the principal federal statute governing the treatment, storage and disposal of hazardous wastes. RCRA imposes stringent operating requirements, and liability for failure to meet such requirements, on a person who is either:

● a "generator" or "transporter" of hazardous waste, or

● an "owner" or "operator" of a hazardous waste treatment, storage or disposal facility.

At present, RCRA includes a statutory exemption that allows oil and natural gas exploration and production wastes to be classified as nonhazardous waste. As a result, we will not be subject to many of RCRA's requirements because our operations will probably generate minimal quantities of hazardous wastes.

CERCLA, also known as "Superfund," imposes liability, without regard to fault or the legality of the original act, on certain classes of persons that contributed to the release of a "hazardous substance" into the environment. These persons include:

● the "owner" or "operator" of the site where hazardous substances have been released, and

● companies that disposed or arranged for the disposal of the hazardous substances found at the site.

CERCLA also authorizes the EPA and, in some instances, third parties to act in response to threats to the public health or the environment and to seek to recover from the responsible classes of persons the costs they incur. In the course of our ordinary operations, we could generate waste that may fall within CERCLA's definition of a "hazardous substance." As a result, we may be liable under CERCLA or under analogous state laws for all or part of the costs required to clean up sites at which such wastes have been disposed. Under such law we could be required to:

● remove or remediate previously disposed wastes, including wastes disposed of or released by prior owners or operators,

● clean up contaminated property, including contaminated groundwater, or

● perform remedial plugging operations to prevent future contamination.

We could also be subject to other damage claims by governmental authorities or third parties related to such contamination.

**Climate Change.** Significant studies and research have been devoted to climate change, and climate change has developed into a major political issue in the United States and globally. Certain research suggests that greenhouse gas emissions contribute to climate change and pose a threat to the environment. Recent scientific research and political debate has focused in part on carbon dioxide and methane incidental to oil and natural gas exploration and production.

In the United States, no comprehensive federal climate change legislation has been implemented to date but the current administration has indicated willingness to pursue new climate change legislation, executive actions or other regulatory initiatives to limit greenhouse gas ("GHG") emissions. These include rejoining the Paris Agreement treaty on climate change, several executive orders to address climate change, the U.S. Methane Emissions Reduction Action Plan, and a commitment to cut greenhouse gas emissions 50-52 percent of 2005 levels by 2030. Further, legislative and regulatory initiatives are underway to that purpose. The U.S. Congress has considered legislation that would control GHG emissions through a "cap and trade" program and several states have already implemented programs to reduce GHG emissions. The U.S. Supreme Court determined that GHG emissions fall within the CAA definition of an "air pollutant." Recent litigation has held that if a source was subject to Prevention of Significant Deterioration ("PSD") or Title V based on emissions of conventional pollutants like sulfur dioxide, particulates, nitrogen dioxide, carbon monoxide, ozone or lead, then the EPA could also require the source to control GHG emissions and the source would have to install Best Available Control Technology to do so. As a result, a source may still have to control GHG emissions if it is an otherwise regulated source.

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In 2014, Colorado was the first state in the nation to adopt rules to control methane emissions from oil and natural gas facilities. In 2016, the EPA revised and expanded NSPS to include final rules to curb emissions of methane, a greenhouse gas, from new, reconstructed and modified oil and natural gas sources. Previously, already existing NSPS regulated VOCs, and controlling VOCs also had the effect of controlling methane, because natural gas leaks emit both compounds. However, by explicitly regulating methane as a separate air pollutant, the 2016 regulations were a statutory predicate to propose regulating emissions from existing oil and natural gas facilities. In September 2020, EPA made technical and policy changes to the methane rules that limited the scope of the rules. In 2021, President Biden issued Executive Order 13990, Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis. In furtherance of this EO, EPA on November 2, 2021 proposed rules to regulate methane emissions from the oil and natural gas industry, including, for the first time, reductions from certain upstream and midstream existing oil and natural gas sources. These regulations also expanded controls to reduce methane emissions, such as enhancement of leak detection and repair provisions. The Pipeline and Hazardous Materials Safety Administration ("PHMSA") and the Department of Interior continue to focus on regulatory initiatives to control methane emissions from upstream and midstream equipment. To the extent that these regulations or initiatives remain in place and to the extent that our third-party operating partners are required to further control methane emissions, such controls could impact our business.

In addition, our third-party operating partners are required to report their GHG emissions under CAA rules. Because regulation of GHG emissions continues to evolve, further regulatory, legislative and judicial developments are likely to occur. Such developments may affect how these GHG initiatives will impact us. Moreover, while the U.S. Supreme Court held in its 2011 decision *American Electric Power Co. v. Connecticut* that, with respect to claims concerning GHG emissions, the federal common law of nuisance was displaced by the CAA, the Court left open the question of whether tort claims against sources of GHG emissions alleging property damage may proceed under state common law. There thus remains some litigation risk for such claims. Due to the uncertainties surrounding the regulation of and other risks associated with GHG emissions, we cannot predict the financial impact of related developments on us.

Legislation or regulations that may be adopted to address climate change could also affect the markets for our products by making our products more or less desirable than competing sources of energy. To the extent that our products are competing with higher GHG emitting energy sources, our products would become more desirable in the market with more stringent limitations on GHG emissions. To the extent that our products are competing with lower GHG emitting energy sources such as solar and wind, our products would become less desirable in the market with more stringent limitations on GHG emissions. We cannot predict with any certainty at this time how these possibilities may affect our operations.

The majority of scientific studies on climate change suggest that extreme weather conditions and other risks may occur in the future in the areas where we operate, although the scientific studies are not unanimous. Although operators may take steps to mitigate any such risks, no assurance can be given that they will not have a material adverse effect on our business.

**Employees**

As of December 1, 2022, we have three contractors, Jay Leaver, our President, Lacie Kellogg, our CFO, Jeffrey Wright, a contract field operations officer, and zero employees.

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**PROPERTIES**

Our principal executive office is located at 14143 Denver West Parkway, Suite 100, Golden, CO 80401, where we rent a virtual office from an unrelated third party, on a month-to-month basis, for a nominal amount. The services provided include telephone answering, mail receipt, and paid access to conference rooms. We do not believe that we will need to maintain a physical office at any time in the foreseeable future in order to carry out our plan of operations described herein.

**MANAGEMENT**

The following table presents information with respect to our officers and directors as of the date of this prospectus:

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| | |
|:---|:---|
| **Name and Address** | **Position(s)** |
| Jay Leaver | President |
| Lacie Kellogg | Chief Financial Officer and Director |
| Robert J. Flynn, Jr | Chairman of the Board |
| Richard M. Nummi | Director |
| Mark S. Timm | Director |
| Jeffrey Wright | Contract Field Operations Officer |

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Jay Leaver, 59, President since 2020. From 1995 to present, Mr. Leaver served as President and geologist of Leaverite Exploration Inc., a consulting firm specializing in oil and natural gas and mineral exploration, which served as a consultant to the Company since 2019. Mr. Leaver also served as President of Visionary Resources, LLC, a prospect generation firm, since 2017; Chicorica, LLC, a prospect generation firm, since 2015 to present, RA Gallery, LLC, a remote sensing data repository, since 2017, Haycorn Research Ltd., a remote sensing data repository, since 2018, Rubicon Exploration, LLC, a mineral exploration company, since 2008, Mrs. Hudson Lodgings, LTD, a real estate and rental company, since 2020, and as managing member of Torrent Oil & Gas, LLC and Orogen Oil & Gas LLC, a prospect holding company, since 2022. From 2009 to 2012 Mr. Leaver held various positions with Sun River Energy. Mr. Leaver also worked for Thomasson Partner Associates, Inc. in the US and Australia from 2006-2010 where he served as Vice President – Geoscience and Executive Vice President. Mr. Leaver received a B.S. degree in Geological Engineering from the Colorado School of Mines in 1986. Mr. Leaver is a member of the AAPG, GSA, SPE and SEG associations, including serving as Secretary of the Rocky Mountain Association of Geologists.

Lacie Kellogg, 59, Chief Financial Officer since July 11, 2022 and director since 2018. Ms. Kellogg is a consultant for Accounting Solutions and Services, LLC and has 37 years of accounting experience, 28 of which are in the Oil and natural gas industry. Her experience is in the areas of Financial Reporting, Audit, Operations Accounting and Software Implementation. Ms. Kellogg earned her BBA from the University of Houston in 1986 and has worked with Carrizo Oil and natural gas, Aurora Oil & Gas, an Australian based company, and as a private consultant in the energy field. She is a member of COPAS (Council of Petroleum Accountants Society) and is active in the local chapter previously holding Audit and Financial Reporting committee Chairs. Ms. Kellogg serves on the board of directors of TCI Acquisition Company Inc. and is interim Chief Financial Officer of Surgical Safety Scanner, Inc. Ms. Kellogg was appointed to the Board of Directors based upon her experience in accounting and financial reporting in the oil and natural gas industry.

Robert J. Flynn, Jr., Esq., 78, director since 2017, is a member of the District of Columbia bar. From 1982 – present served as principal in the Law Office of Robert J. Flynn, Jr., and previously was employed in private practice, and as Assistant Attorney General for the District of Columbia and Captain, U.S. Army. Mr. Flynn received a J.D degree from the Georgetown Law Center in 1968 and a L.L.M from the George Washington National Law School in 1973. Mr. Flynn also attended the Georgetown University School of Foreign Service and earned a B.S.F.S. in 1965. Mr. Flynn is a director of IntreOrg Systems, Inc., and TCI Acquisition Company, Inc. Mr. Flynn was appointed to the Board of Directors based upon his experience in regulatory compliance matters and management skills.

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Richard M. Nummi, Esq., 63, director since 2018, is a member of the Florida bar. From 2005 – 2012 Mr. Nummi served as managing partner and Chief Legal Officer of Nummi & Associates, P.A., a financial industry consultant, with previous positions as counsel to various broker-dealers and financial institutions. From 2000 to 2004 served as senior attorney with the Office of Compliance Inspections and Examinations, of the United States Securities and Exchange Commission, Washington, D.C. Mr. Nummi has been a frequent lecturer on securities and compliance matters. Mr. Nummi received a J.D. degree from the Stetson University College of Law, St. Petersburg, Florida in 1991 and a B.A from The Virginia Wesleyan University in 1984. Mr. Nummi is a director of Trans-Lux Corporation (OTC:TNLX) and Surgical Safety Scanner, Inc. Mr. Nummi receives director's fees in the amount of $24,000 per year, payable monthly in cash or Company stock at a value of $0.50 per share or the month's closing price (provided payment is subject to available funds from investments of positive cash-flow, and if funds are available), plus reimbursement of expenses under the terms of a director's agreement entered in 2018. Under the terms of the agreement, Mr. Nummi is also entitled to indemnification against liabilities incurred in the performance of services as provided in the Company's Articles of Incorporation, by-laws and applicable law. Mr. Nummi was appointed to the Board of Directors based upon his experience in regulatory compliance matters and management skills.

Mark Timm, 51, director since 2022. From 2008-2022 Mr. Timm served as CEO of Timm Investments, LLC and from 1996-2016 as CEO of Cottage Garden, Inc. From 2017 - 2019 Mr. Timm was owner and Chief Marketing Officer of Sincerely Hers, Inc. Since 2020 Mr. Timm served on the board of directors of Hapbee Technologies (OTCQB:HAPBF), Vancouver, Canada and also serves on the board of directors of Eco Integrated Technologies, TrendTek Bio, Inc. Gravy Stack Incorporated and IntegriMedical LLC. Mr. Timm also serves on the board of directors of TCI Entertainment, Inc. and Surgical Safety Scanner, Inc. Mr. Timm is the author of Mentor to Millions and has started more than a dozen companies. Mr. Timm received a B.S. degree from the University of Maryland in 1993. Mr. Timm was appointed to the Board of Directors based upon his experience as an entrepreneur, board of director experience, finance and M&A.

Jeffrey Wright, 40, has served as a Field Manager for the Company since October 15, 2022. Mr. Wright has over 16 years in the oil, gas and energy sectors. He has worked at Matador Wellsite Consulting,LLC since 2020. Prior to that, we worked at Contango Oil & Gas, White Star Petroleum and Devon Energy. Mr. Wright received a B.A. degree from Angelo State University in 2004.

*Board of Directors*

On September 8, 2022, the Company's Board of Directors increased the size of the Board to four and appointed one new director, Mark Timm. On September 16, 2022, the stockholders elected the four incumbent directors, as listed herein and to serve from date of election for a one-year term and until their successors are duly elected and qualified.

*Board of Directors Agreements*

Certain of our directors (Mr. Flynn, Mr. Nummi and Ms. Kellogg) have entered into a Board of Directors Agreement with the Company which sets forth the terms pursuant to which the director serves on our Board. The Company's current compensation plan compensates each of its directors with 4,000 shares of common stock each month plus reimbursement of expenses. During the nine months ended September 30, 2022*,* the Company recorded stock compensation of $120,000 and issued 108,000 shares of common stock to directors pursuant to the Board of Directors Agreements. Under the Board of Directors Agreement, the Company agrees to defend and indemnify the director against any liability incurred in the performance of service as a director of the Company to the fullest extent authorized in the Company's articles of incorporation, bylaws, and applicable law. The Board of Directors Agreements are for a period of one year and are renewed annually, for so long as the director is elected as a member of the Board of Directors by the shareholders of the Company.

<u>Director Compensation</u> <u>–</u> <u>December 31, 2021</u>

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| | | | | |
|:---|:---|:---|:---|:---|
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($)(2) | Total ($) |
| Robert J. Flynn (3) |  | 48000 | – | 48000 |
| Lacie Kellogg (4) | 55432 | 48000 | – | 103432 |
| Richard M. Nummi (5) |  | 48000 | – | 48000 |
| Mark Timm |  |  | – |  |
| John Lepin (6) | 25250 |  | – | 25.250 |

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<br> (1) Represents compensation as a director awards of common stock issued pursuant to agreements with directors for amounts payable in shares of common stock at $0.50 per share.

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(2) None.

(3) Mr. Flynn's compensation was paid pursuant to a Board of Directors Agreement between the Company and Mr. Flynn dated as of October 1, 2018 under which he is entitled to receive an annual fee at the rate of $24,000 payable $2,000 per month through the issuance of shares of stock at a value of $0.50 per share, plus reimbursement of expenses. The Board of Directors Agreement is for one year period and renews annually, for so long as Mr. Flynn is elected as a member of the Board of Directors by the shareholders of the Company.

(4) Ms. Kellogg's compensation was paid pursuant to a Board of Directors Agreement between the Company and Ms. Kellogg dated as of February 27, 2018 under which she is entitled to receive an annual fee at the rate of $24,000 payable $2,000 per month through the issuance of shares of stock at a value of $0.50 per share, plus reimbursement of expenses. The Board of Directors Agreement is for one year period and renews annually, for so long as Ms. Kellogg is elected as a member of the Board of Directors by the shareholders of the Company. Excludes amounts paid as executive compensation. See "Executive Compensation".

(5) Mr. Nummi's compensation was paid pursuant to a Board of Directors Agreement between the Company and Mr. Nummi under which he is entitled to receive an annual fee at the rate of $24,000 payable $2,000 per month through the issuance of shares of stock at a value of $0.50 per share, plus reimbursement of expenses. The Board of Directors Agreement is for one year period and renews annually, for so long as Mr. Nummi is elected as a member of the Board of Directors by the shareholders of the Company.

(6) Through April 8, 2022.

*Director Independence*

Our Board of Directors is comprised of a majority of "independent directors" as defined under Rule 803 of the NYSE American Company Guide ("Rule 803"). Under such definitions, our Board has undertaken a review of the independence of each director. Based on information provided by each director concerning his or her background, employment and affiliations, our Board has determined that each of Mr. Flynn, Mr. Nummi and Mr. Timm are all independent directors of the Company.

*Committees of the Board*

On August 8, 2022, the Board of Directors re-established an Audit, Nominating and Corporate Governance Committee and Compensation Committees and on September 8, 2022, each of Mr. Flynn, Mr. Nummi, Ms. Kellogg and Mr. Timm were appointed to serve as a member of each committee. Mr. Nummi serves as chairman of the Nominating and Corporate Governance Committee, Mr. Timm serves as chairman of the Compensation committee and Mr. Flynn serves as Chairman of the Board of Directors. Following completion of the offering the Company will appoint a financial expert in accordance with the rules of the NYSE American Stock Exchange and appoint a third independent director to the Audit Committee.

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*Audit Committee*

Following the closing of this offering, Mr. Flynn, Mr. Nummi and Mr. Timm shall serve as members of the Audit Committee and shall serve as chair of the Committee. will serve as an "audit committee financial expert," as defined under the applicable rules of the SEC.

Our Audit Committee has the responsibility for, among other things, (i) selecting, retaining and overseeing our independent registered public accounting firm, (ii) obtaining and reviewing a report by independent auditors that describe the accounting firm's internal quality control, and any materials issues or relationships that may impact the auditors, (iii) reviewing and discussing with the independent auditors standards and responsibilities, strategy, scope and timing of audits, any significant risks, and results, (iv) ensuring the integrity of the Company's financial statements, (v) reviewing and discussing with the Company's independent auditors any other matters required to be discussed by PCAOB Auditing Standard No. 1301, (vi) reviewing, approving and overseeing any transaction between the Company and any related person and any other potential conflict of interest situations, (vii) overseeing the Company's internal audit department, (viii) reviewing, approving and overseeing related party transactions, and (ix) establishing and overseeing procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters.

*Nominating and Corporate Governance Committee*

Following the closing of this offering, Mr. Flynn, Mr Nummi, Mr. Timm and Ms. Kellogg shall serve as members of the Nominating and Corporate Governance Committee and Mr. Nummi shall serve as chair of the Committee.

Our Nominating and Corporate Governance Committee has the responsibility relating to assisting the Board in, among other things, (i) identifying and screening individuals qualified to become members of our board of directors, consistent with criteria approved by our Board of Directors, (ii) recommending to the Board the approval of nominees for director, (ii) developing and recommending to our board of directors a set of corporate governance guidelines, and (iv) overseeing the evaluation of our board of director.

*Compensation and Management Development Committee*

Following the closing of this offering, Mr. Flynn, Mr Nummi, Mr. Timm and shall serve as members of the Compensation Committee and Mr. Timm shall serve as chair of the Committee.

Our Compensation Committee has the responsibility for, among other things, (i) reviewing and approving the chief executive officer's compensation based on an evaluation in light of corporate goals and objectives, (ii) reviewing and recommending to the Board the compensation of all other executive officers, (iii) reviewing and recommending to the Board incentive compensation plans and equity plans, (iv) reviewing and discussing with management the Company's Compensation Discussion and Analysis and related information to be included in the annual report on Form 10-K and proxy statements.

*Code of Business Conduct and Ethics*

We have adopted a written Code of Ethics and Business Conduct that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Upon our listing on the NYSE American, our Code of Ethics and Business Conduct will be available under the Corporate Governance section of our website at *www.alphaenergy.us*. In addition, we intend to post on our website all disclosures that are required by law or the rules of the NYSE American concerning any amendments to, or waivers from, any provision of the code. The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be a part of this prospectus.

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**Family Relationships**

There are no family relationships among any of our officers or directors.

**Executive Compensation** 

The following table provides information regarding the compensation earned for the years ended December 31, 2022 and 2021, for (i) all individuals serving as our principal executive officer or acting in a similar capacity during 2022 ("PEO"), and (ii) all individuals serving as our principal financial officer or acting in a similar capacity during 2022 ("PEO"):

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name and Principal Position** | **Year** <br> **Ended** <br> **Dec. 31** | **Salary**<br> **($)** | **Bonus** <br> **($)** | **Stock**<br> **Award(s)**<br> **($)<sup>(3)</sup>** | **Option** <br> **Awards**<br> **($)** | **Warrant Awards** | **Non**<br> **Equity** <br> **Incentive** <br> **Plan** <br> **Compen-**<br> **sation** | **Change in** <br> **Pension** <br> **Value and** <br> **Non-**<br> **Qualified** <br> **Deferred** <br> **Compen-**<br> **sation** <br> **Earnings**<br> **($)** | **All Other**<br> **Compen-**<br> **sation**<br> **($)<sup>(1)</sup>** | **Total ($)** |
| **(a)** | **(b)** | **(c)** | **(d)** | **(e)** | **(f)** |  | **(g)** | **(h)** | **(i)** | **(j)** |
| Jay Leaver, President (1) | 2022 | 60000 |  |  |  |  |  |  |  | 60000 |
|  | 2021 |  |  |  |  |  |  |  |  |  |
| John Lepin (2) | 2022 | 25250 |  |  |  |  |  |  |  | 25250 |
|  | 2021 | 144000 |  | 73000 |  |  |  |  | 9000 | 226000 |
| Lacie Kellogg, Chief Financial Officer | 2022 | 55432 |  | 48000 |  |  |  |  |  | 103432 |
|  | 2021 |  |  | 48000 |  |  |  |  |  | 48000 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Mr. Leaver's compensation was paid pursuant to a Consultant Engagement Agreement between the Company and Mr. Leaver dated as of June 1, 2020, pursuant to which Mr. Leaver serves as President of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Mr. Lepin served as Chief Financial Officer and a director through April 8, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Excludes compensation payable in the form of Directors Fees. See "*Director Compensation* ".

**Compensation Committee Interlocks and Insider Participation**

None of our executive officers serves as a member of the Board of Directors or compensation committee of any other entity that has one or more of its executive officers serving as a member of our Board of Directors.

**Management Agreements**

Jay Leaver, our President, acting in his capacity as representative of Leaverite Exploration, Inc., is a party to a Consultant Engagement Agreement with the Company, dated June 1, 2020, pursuant to which he serves as President of the Company on an independent contractor basis. Under the terms of the Consulting Agreement Mr. Leaver is entitled to receive $10,000 per month as a consulting fee, plus reimbursement of expenses. Pursuant to the Agreement, the services Mr. Leaver provides to the Company will constitute at a maximum, 50% of his time. The Agreement renews annually provided that either party may terminate the Agreement by giving the other party 15 days written notice. Mr. Leaver is also entitled to indemnification against claims, actions, liabilities, costs, expenses, including attorney fees, arising in connection with possession use or advice or other services provided under the Agreement.

The Company is a party to a Consultant Engagement Agreement with Matador Wellsite Consulting, LLC ("Matador"), dated October 15, 2022, pursuant to which Jefffrey Wright, the manager of Matador, advises the Company with respect to energy operations, project development, and oil field management. The Agreement provides that the Company pay Matador $10,000 per month as a consulting fee and issues 2,000 shares of its common stock per month to Jeffrey Wright. The Agreement has an initial term of 12 months after which it renews monthly unless terminated by the parties. Either party may terminate the Agreement by giving the other party 15 days written notice.

Ms. Kellogg, our Chief Financial Officer, is party to a Board of Directors Agreement dated as of February 27, 2018, pursuant to which she serves as director of the Company. Under the agreement, Ms. Kelloff is entitled to receive an annual fee at the rate of $24,000 payable $2,000 per month through the issuance of shares of stock at a value of $0.50 per share, plus reimbursement of expenses. The Agreement is for one year period and renews annually, for so long as Ms. Kellogg is elected as a member of the Board of Directors by the shareholders of the Company.

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The Company entered into an Employment Agreement with John Lepin, dated October 27, 2018, pursuant which Mr. Lepin served as President and Chief Financial Officer of the Company. Pursuant to the Agreement, Mr. Lepin received a monthly salary of $10,000 and a stock bonus. Mr. Lepin resigned as director, officer and employee of the Company on April 8, 2022.

Except for the foregoing, no current executive officer of the Company has, as of the date of this prospectus, entered into an employment agreement with the Company.

**Involvement in Certain Legal Proceedings**

On November 24, 2021 the Supreme Court of the State of Florida entered an order in the matter of <u>Florida Bar v. Richard Mark Nummi, a director of the Company,</u> under which Mr. Nummi agreed to a 30 day suspension from the practice of law and agreed to pay $4,013 in costs. The nature of the action involved violation of certain Florida rules governing attorneys regarding communications, failure to respond to inquiry from bar counsel and trust account matters. Additional claims under Florida bar Rule 4-1.2 and 4-8.4(c) were dismissed.

On March 6, 2007, an Order Accepting Settlement Offer was entered in the matter of Department of Enforcement v GunnAllen Financial, Inc. and Richard M. Nummi, Stephen I. Saunders IV and Brian E. Sanders Disciplinary Proceeding No. E0720040066101 before the Department of Enforcement of the National Association of Securities Dealers, Inc. (NASD). From July 2003 to November 2005, Mr. Nummi was registered as a general securities principal and served as chief compliance offer of GunnAllen Financial, Inc. The matter asserted various supervisory and regulatory lapses in connection with Mr. Nummi's association with GunnAllen Financial, Inc. As a result, a fine of $45,000 was imposed and a 60-day suspension from associating with a NASD member requiring registration as a principal by the tribunal was ordered.

**CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**

**Related Party Transactions** 

The Company is a party to Consulting Agreement with Fidare Consulting Group, LLC ("Fidare"), dated September 2, 2022, pursuant to which Fidare advises the Company regarding corporate structuring, strategic planning and compliance issues. Fidare is an affiliate of AEI Acquisition Company, LLC which is the controlling stockholder of the Company. Under the terms of the Consulting Agreement, the Company pays Fidare $15,000 per month for services provided thereunder and reimburses Fidare for pre-approved expenses. The term of the Consulting Agreement is 12 months and renews automatically thereafter on a month-to-month basis.

The Company receives advances from time to time from affiliates of a significant stockholder. As of December 31, 2022, the Company repaid $10,000 of advances and $413,206 of advances were exchanged for 7.25% Senior Secured Convertible Notes due December 31, 2024 (the "AEI Note")*.*

On June 1, 2021, the Company entered into a convertible credit line with a related party, AEI Acquisition Company, LLC, the owner of 74% of the Company's common stock, which provides for up to $1,500,000 of advances. The outstanding principal amount accrues interest at a rate of 7% per annum and is convertible into shares of common stock at a rate equal to the lesser of (i) $1.50 per share or (ii) the closing price on the common stock on the primary trading market for our common stock on the day immediately preceding the date of conversion. On February 11, 2023, the convertible credit line was amended to provide for a fixed conversion rate of $1.50 per share on any amount of principal or interest converted. Under the terms of the convertible credit line, the Company may borrow and AEI Acquisition Company, LLC may advance funds through closing of the offering. The outstanding principal balance on the convertible credit line as of December 31, 2021 and 2020 was $168,328 and $148,328 respectively and the principal amount outstanding as of February 12, 2023 was $0. The amount of principal paid under the convertible credit line during fiscal year 2021 and 2020, was $0 and $4,250, respectively. The amount of interest paid during fiscal year 2021 and 2020, respectively was $0 and $0 and the applicable interest rate was 7% per annum. Upon the closing of this offering, any amounts due under the convertible credit line will be paid in full from the proceeds and the credit line will be terminated.

The Company was a party to a Consultant Engagement Agreement with Kelloff Oil and Natural Gas, LLC, dated April 1, 2021, pursuant to which Joe Kelloff served as interim Senior Vice President of the Company. Pursuant to the Agreement, Mr. Kelloff received a monthly salary of $10,000 and a stock bonus. Mr. Kelloff resigned as an officer and employee of the Company on August 14, 2021.

*Accounts Payable and Accrued Expenses - Related Parties*

As of December 31, 2021*,* there was $228,668 of accounts payable to related parties which consisted of $208,484 due to Jay Leaver, the Company's president, for his services as President, under his Management Consulting Agreement, $4,394 due to former CFO John Lepin, for his services as CFO, and $10,000 due to Kelloff Oil & Gas, LLC, a limited liability company, for the services of Joe Kelloff as interim Senior Vice President of Operations and $5,790 due to Staley Engineering LLC for consulting services.

As of September 30, 2022*,* there was $203,484 of accounts payable to related parties which consisted of $203,484 due to Jay Leaver, the Company's president, for his services as President, under his Management Consulting Agreement.

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*Senior Secured Convertible Notes Payable* – *Related Parties*

On *December 3, 2020,* the Company issued a $65,000 principal amount promissory note to Jay Leaver, our President. The unsecured note matured three years from date of issuance and bears interest at a rate of 5% per annum. As of December *31, 2021,* the note payable had unpaid accrued interest in the amount of $13,003. On February *23, 2022,* the promissory note was amended to a principal amount of $406,750, which included the original $65,000 plus additional advances of $325,580, and accrued interest of $16,170. An additional $110,235 was advanced during the *nine* months ended September *30, 2022* maturing February *23, 2025.* In February *2022*, Mr. Leaver advanced an additional $500,000 to the Company. On February *25, 2022,* Mr. Leaver's $406,750 promissory note and $500,000 advance were assigned to *20* Shekels, Inc, a corporation wholly-owned by Marshwiggle, LLC, a limited liability company jointly owned by Mr. Leaver and his spouse and on February *25, 2022* the Company issued $906,750 of its secured senior secured convertible notes due February *24, 2024,* bearing interest at a rate of 7.25% per annum in exchange for the prior obligations (the "Shekels Note"). The Shekel Note bore interest at 7.25% and matured on February *25,* 2024 and subsequently was exchanged for 7.25% Senior Secured Convertible Notes due December 31, 2024.

The Company has received advances from time to time from affiliates of a significant stockholder. As of December 31, 2022, the Company repaid $10,000 of advances and $413,206 of advances were exchanged for 7.25% Senior Secured Convertible Notes due December 31, 2024 (the "AEI Note")*.*

On December 31, 2022, the Company entered into an Exchange Agreement with AEI Management, Inc. and 20 Shekels, Inc. pursuant to which each of the 20 Shekels Note and the AEI Note were exchanged for 7.25% Notes maturing December 31, 2024. The 7.25% Notes are convertible at any time after the date of issuance into shares of the Company's common stock at a fixed conversion price of $5.00 per share. Obligations under the 7.25% Notes are secured by the Logan Project's assets, other than leases.

Under the terms of the Exchange Agreement, 20 Shekels, Inc. was issued $906,754 of 7.25% Notes and AEI Management Inc. was issued $413,206 of 7.25% Notes.

**SECURITY OWNERSHIP OF CERTAIN**<br> **BENEFICIAL OWNERS AND MANAGEMENT**

The following table shows the beneficial ownership of shares of our common stock as of January 1, 2023 known by us through transfer agent records, held by: (i) each person who beneficially owns 5% or more of the shares of common stock then outstanding; (ii) each of our directors; (iii) each of our named executive officers; and (iv) all of our directors and executive officers as a group.

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The information in this table reflects "beneficial ownership" as defined in Rule 13d-3 of the Exchange Act. To our knowledge and unless otherwise indicated, each stockholder has sole voting power and investment power over the shares listed as beneficially owned by such stockholder, subject to community property laws where applicable. Percentage ownership is based on 21,648,326 shares of Common Stock outstanding as of January 1, 2023.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Common Stock (1) | Common Stock (1) |  | Post closing |
| Name of Beneficial Owner | Shares | % (2)(3) |  | Shares% |
| **Directors and Executive Officers** |  |  |  |  |
| Named Executive Officers: |  |  |  |  |
| Jay Leaver, President (5) | 181351 | \* |  | \* |
| Lacie Kellogg, Chief Financial Officer, and director | 244000 | \* |  | \* |
| Non-Employee Directors: |  |  |  |  |
| Robert J. Flynn, Chairman | 350800 |  | 1.6% | \* |
| Richard M. Nummi | 216000 | \* |  | \* |
| Mark Timm (4) | 15000 | \* |  | \* |
| Officers and Directors as a Group:<br> (5 persons): | 1007151 | 4.6% |  |  |
| 5% Stockholders: |  |  |  |  |
| Harry McMillan (6) |  |  |  |  |
|  | 15880201 | 78% |  |  |
|  | 16887352 |  |  |  |

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\* Represents less than one percent.

(1) Each director, officer and 5% holder maintains sole voting and investment power over the shares reported, unless otherwise noted.

(2) Percent of class based on 21,648,326 shares of common stock outstanding as of January 1, 2023.

(3) Excludes with respect to Jay Leaver and Mark Timm, a 3.6% and 2.7% membership interest in AEI Acquisition Company, LLC, respectively, over which the reporting person does not exercise control and disclaims beneficial ownership.

(4) Mr. Timm beneficially owns indirectly 10,000 shares through Timm Investments, LLC and 5,000 shares owned by his wife.

(5) Represents 181,351 shares of our Common Stock issuable upon conversion of $906,754 principal amount of the Company's 7.25% Senior Secured Convertible Notes convertible at $5.00 per share.

(6) Represents 15,880,201 shares of common stock held by AEI Acquisition Company, LLC. Harry McMillan maintains sole voting and investment power over AEI Acquisition Company, LLC as sole owner of AEI Management, Inc. which is the managing member of AEI Acquisition Company, LLC. . Excludes shares of our Common Stock issuable upon conversion of the Company's 7.25% Note due December 31, 2024 issued to AEI Management, Inc, in the amount of $413,206 convertible at $5.00 per share, subject to beneficial ownership blockers under which conversion is limited to no more than 4.99% of the Common Stock outstanding,

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***Trading***

Our common stock currently is quoted on the OTC Pink Open Markets under the symbol "APHE".

***Transfer Agent and Registrar***

The transfer agent and registrar for our common shares is Equity Stock Transfer, LLC New York, NY.

**DESCRIPTION OF SECURITIES**

**Authorized Capital Stock**

We have 65,000,000 authorized shares of $0.001 par value common stock and 10,000,000 authorized shares of preferred stock, $0.001 per share par value.

**Common Stock**

***Dividends.*** Each share of common stock is entitled to receive an equal dividend, if one is declared, which is unlikely. We have never paid dividends on our common stock and do not intend to do so in the foreseeable future. We intend to retain any future earnings to finance our growth. See Risk Factors.

***Liquidation.*** If our company is liquidated, any assets that remain after the creditors are paid, and the owners of preferred stock receive any liquidation preferences, will be distributed to the owners of our common stock pro-rata.

***Voting Rights.*** Each share of our common stock entitles the owner to one vote. There is no cumulative voting. A simple majority can elect all of the directors at a given meeting and the minority would not be able to elect any directors at that meeting.

***Preemptive Rights.*** Owners of our common stock have no preemptive rights. We may sell shares of our common stock to third parties without first offering it to current stockholders.

***Redemption Rights.*** We do not have the right to buy back shares of our common stock except in extraordinary transactions such as mergers and court approved bankruptcy reorganizations. Owners of our common stock do not ordinarily have the right to require us to buy their common stock. We do not have a sinking fund to provide assets for any buy back.

***Conversion Rights.*** Shares of our common stock cannot be converted into any other kind of stock except in extraordinary transactions, such as mergers and court approved bankruptcy reorganizations.

***Limitations on Stockholder Actions.*** Title 7 of the Colorado Revised Statutes ("CRS") provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he is not liable or acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Title 7 of the Colorado Revised Statutes further provides that a corporation similarly may indemnify any such person serving in any such capacity who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred in connection with the defense or settlement of such action or suit if he is not liable pursuant to Title 7 of the Colorado Revised Statutes or acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the court or other court of competent jurisdiction in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court or other court of competent jurisdiction shall deem proper.

Our bylaws provide that we may indemnify its officers, directors, agents and any other persons to the fullest extent permitted by the CRS.

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**Indemnification of Directors and Officers**

2021 Colorado Code, Title 7 - Corporations and Associations, Article 129 - Indemnification§ 7-129-101. provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent to the registrant. The law is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. The registrant's bylaws provide for indemnification by the registrant of its directors, officers and employees to the fullest extent permitted by the Colorado law.

Colorado law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions, or (iv) for any transaction from which the director derived an improper personal benefit. The registrant's certificate of incorporation provides for such limitation of liability.

The registrant maintains standard policies of insurance under which coverage is provided (a) to its directors and officers against loss arising from claims made by reason of breach of duty or other wrongful act, and (b) to the registrant with respect to payments which may be made by the registrant to such officers and directors pursuant to the above indemnification provision or otherwise as a matter of law.

The proposed form of Underwriting Agreement, filed as Exhibit 1.1 to this registration statement, provides for indemnification of directors and officers of the registrant by the underwriters against certain liabilities.

The registrant expects to enter into customary indemnification agreements with its executive officers and directors, prior to the closing of this offering, that will provide for indemnification against expenses, judgments, fines and penalties actually and reasonably incurred by an indemnitee in connection with threatened, pending or completed actions, suits or other proceedings, subject to certain limitations, as well as for the advancement of expenses in connection with a proceeding prior to a final, non-appealable judgment or other adjudication, provided that the indemnitee provides an undertaking to repay to us any amounts advanced if the indemnitee is ultimately found not to be entitled to indemnification by us.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed hereby in the Securities Act and we will be governed by the final adjudication of such issue.

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**UNDERWRITING**

ThinkEquity LLC is acting as representative of the underwriters. Subject to the terms and conditions of an underwriting agreement between us and the representative, we have agreed to sell to each underwriter named below, and each underwriter named below has severally agreed to purchase, at the public offering price less the underwriting discounts set forth on the cover page of this prospectus, the number of shares of common stock listed next to its name in the following table:

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| | |
|:---|:---|
| **Underwriter** | **Number**<br> **Shares**<br> **of Common**<br> **Stock** |
| ThinkEquity LLC |  |
| **Total** |  |

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The underwriting agreement provides that the obligations of the underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to various conditions and representations and warranties, including the approval of certain legal matters by their counsel and other conditions specified in the underwriting agreement. The shares of common stock are offered by the underwriters, subject to prior sale, when, as and if issued to and accepted by them. The underwriters reserve the right to withdraw, cancel or modify the offer to the public and to reject orders in whole or in part. The underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus if any such shares of common stock are taken, other than those shares of common stock covered by the over-allotment option described below.

We have agreed to indemnify the underwriters against specified liabilities, including liabilities under the Securities Act, and to contribute to payments the underwriters may be required to make in respect thereof.

**Over-Allotment Option**

We have granted a 45-day option to the representative of the underwriters to purchase up to additional shares of our common stock at a public offering price of $ per share, solely to cover over-allotments, if any. The underwriters may exercise this option for days from the date of this prospectus solely to cover sales of shares of common stock by the underwriters in excess of the total number of shares of common stock set forth in the table above. If any of these additional shares are purchased, the underwriters will offer the additional shares on the same terms as those on which the shares are being offered.

**Discounts and Commissions; Expenses**

The underwriters propose initially to offer the shares of common stock to the public at the public offering price set forth on the cover page of this prospectus and to dealers at those prices less a concession not in excess of $ per share of common stock. If all of the shares of common stock offered by us are not sold at the public offering price, the underwriters may change the offering price and other selling terms by means of a supplement to this prospectus.

The following table shows the public offering price, underwriting discounts and commissions and proceeds before expenses to us. The information assumes either no exercise or full exercise of the over-allotment option we granted to the representative of the underwriters.

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| | | | |
|:---|:---|:---|:---|
|  | **Per Share** | **Total Without**<br> **Over-allotment**<br> **Option** | **Total With**<br> **Over-allotment**<br> **Option** |
| Public offering price | $| $| $|
| Underwriting discount (7.5%) | $| $| $|
| Proceeds, before expenses, to us | $| $| $|

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We have agreed to pay a non-accountable expense allowance to the representative of the underwriters equal to 1.0% of the gross proceeds received at the closing of the offering. We have paid an expense deposit of $50,000 to the representative, which will be applied against the out-of-pocket accountable expenses that will be paid by us to the underwriters in connection with this offering, and will be reimbursed to us to the extent not actually incurred in compliance with FINRA Rule 5110(f)(2)(C).

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We have agreed to reimburse certain expenses of the underwriters relating to this offering as set forth in the underwriting agreement, including the fees and expenses of the underwriter's legal counsel. However, the maximum amount we have agreed to reimburse the underwriter for their accountable expenses will not exceed $222,500.

Our total estimated expenses of the offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, but excluding underwriting discounts and commissions, are approximately $.

**Representative Warrants**

Upon the closing of this offering, we have agreed to issue to the representative warrants, or the Representative's Warrants, to purchase up to shares of common stock (5.0% of the total number of shares sold in this public offering). The Representative's Warrants will be exercisable at a per share exercise price equal to the greater of (i) 125% of the public offering price per share of common stock sold in this offering and (ii) $. The Representative's Warrants are exercisable at any time and from time to time, in whole or in part, during the four and one-half year period commencing 180 days from the commencement of sales of the securities in this offering.

The Representative's Warrants also provide for one demand registration right of the shares underlying the Representative's Warrants, and unlimited "piggyback" registration rights with respect to the registration of the shares of common stock underlying the Representative's Warrants and customary antidilution provisions. The demand registration right provided will not be greater than five years from the date of the underwriting agreement related to this offering in compliance with FINRA Rule 5110(f)(2)(G)(iv). The piggyback registration right provided will not be greater than seven years from the date of the underwriting agreement related to this offering in compliance with FINRA Rule 5110(f)(2)(G)(v).

The Representative's Warrants and the shares of common stock underlying the Representative's Warrants have been deemed compensation by the Financial Industry Regulatory Authority, or FINRA, and are therefore subject to a 180-day lock-up pursuant to Rule 5110(g)(1) of FINRA. The representative, or permitted assignees under such rule, may not sell, transfer, assign, pledge, or hypothecate the Representative's Warrants or the securities underlying the Representative's Warrants, nor will the representative engage in any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the Representative's Warrants or the underlying shares for a period of 180 days from the effective date of the registration statement. Additionally, the Representative's Warrants may not be sold transferred, assigned, pledged or hypothecated for a 180-day period following the effective date of the registration statement except to any underwriter and selected dealer participating in the offering and their bona fide officers or partners. The Representative's Warrants will provide for adjustment in the number and price of the Representative's Warrants and the shares of common stock underlying such Representative's Warrants in the event of recapitalization, merger, stock split or other structural transaction, or a future financing undertaken by us.

**Lock-Up Agreements**

Pursuant to "lock-up" agreements, we, our executive officers and directors, and certain holders of 5% or more of the outstanding shares of common stock, have agreed, without the prior written consent of the representative not to directly or indirectly, offer to sell, sell, pledge or otherwise transfer or dispose of any of shares of our common stock (or enter into any transaction or device that is designed to, or could be expected to, result in the transfer or disposition by any person at any time in the future of our common stock), enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of shares of our common stock, make any demand for or exercise any right or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any shares of common stock or securities convertible into or exercisable or exchangeable for common stock or any other securities of ours or publicly disclose the intention to do any of the foregoing, subject to customary exceptions, for a period of six months after the date of this prospectus in the case of our directors and executive officers and three months after the date of this prospectus in the case of certain stockholders, the Company and any successor of the Company.

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**Right of First Refusal**

Until eighteen months from the closing date of this offering, the representative will have an irrevocable right of first refusal, in its sole discretions, to act as sole investment banker, sole book-runner, and/or sole placement agent participation at the representative's sole discretion, for each and every future public and private equity and debt offering, including all equity linked financings on terms customary to the representative. The representative will have the sole right to determine whether or not any other broker-dealer will have the right to participate in any such offering and the economic terms of any such participation. The representative will not have more than one opportunity to waive or terminate the right of first refusal in consideration of any payment or fee.

**Determination of Offering Price**

The public offering price for our common stock will be determined through negotiations between us and the underwriters. Among the factors to be considered in these negotiations will be prevailing market conditions, our financial information, market valuations of other companies that we and the underwriters believe to be comparable to us, estimates of our business potential, the present state of our development and other factors deemed relevant.

We offer no assurances that the public offering price of our common stock will correspond to the price at which our common stock will trade in the public market subsequent to this offering or that an active trading market for our common stock and warrants will develop and continue after this offering.

**Discretionary Accounts**

The underwriters do not intend to confirm sales of the shares of common stock offered hereby to any accounts over which they have discretionary authority.

**Trading; NYSE American Stock Exchange Listing**

We have applied to have our common stock listed on the NYSE American Stock Exchange, under the symbol " ". No assurance can be given that our application will be approved or that a trading market will develop. The listing of our common stock on the NYSE American is a condition to this offering. Our common stock is currently quoted on the OTC Pink Open Markets, under the symbol "APHE." On , 2023, the last reported sale price of our common stock was $ per share.

**Other**

From time to time, certain of the underwriters and/or their affiliates may in the future provide, various investment banking and other financial services for us for which they may receive customary fees. In the course of their businesses, the underwriters and their affiliates may actively trade our securities or loans for their own account or for the accounts of customers, and, accordingly, the underwriters and their affiliates may at any time hold long or short positions in such securities or loans. Except for services provided in connection with this offering, no underwriter has provided any investment banking or other financial services to us during the 180-day period preceding the date of this prospectus and we do not expect to retain any underwriter to perform any investment banking or other financial services for at least 90 days after the date of this prospectus.

**Price Stabilization, Short Positions and Penalty Bids**

In connection with this offering, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of our common stock. Specifically, the underwriters may over-allot in connection with this offering by selling more shares than are set forth on the cover page of this prospectus. This creates a short position in our common stock for its own account. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares of common stock over-allotted by the underwriters is not greater than the number of shares of common stock that they may purchase in the over-allotment option. In a naked short position, the number of shares of common stock involved is greater than the number of shares common stock in the over-allotment option. To close out a short position, the underwriters may elect to exercise all or part of the over-allotment option. The underwriters may also elect to stabilize the price of our common stock or reduce any short position by bidding for, and purchasing, common stock in the open market.

------

The underwriters may also impose a penalty bid. This occurs when a particular underwriter or dealer repays selling concessions allowed to it for distributing shares of common stock in this offering because the underwriter repurchases the shares of Common Stock in stabilizing or short covering transactions.

Finally, the underwriters may bid for, and purchase, shares of our common stock in market making transactions, including "passive" market making transactions as described below.

These activities may stabilize or maintain the market price of our common stock at a price that is higher than the price that might otherwise exist in the absence of these activities. The underwriters are not required to engage in these activities, and may discontinue any of these activities at any time without notice. These transactions may be effected on the national securities exchange on which our shares of common stock are traded, in the over-the-counter market, or otherwise.

**Indemnification**

We have agreed to indemnify the underwriters against liabilities relating to this offering arising under the Securities Act and the Exchange Act, liabilities arising from breaches of some or all of the representations and warranties contained in the underwriting agreement, and to contribute to payments that the underwriters may be required to make for these liabilities.

**Electronic Distribution**

This prospectus in electronic format may be made available on websites or through other online services maintained by one or more of the underwriters, or by their affiliates. Other than this prospectus in electronic format, the information on any underwriter's website and any information contained in any other website maintained by an underwriter is not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or any underwriter in its capacity as underwriter, and should not be relied upon by investors.

**Selling Restrictions**

No action has been taken in any jurisdiction (except in the United States) that would permit a public offering of our common stock, or the possession, circulation or distribution of this prospectus or any other material relating to us or our common stock in any jurisdiction where action for that purpose is required. Accordingly, our common stock may not be offered or sold, directly or indirectly, and this prospectus or any other offering material or advertisements in connection with our common stock may be distributed or published, in or from any country or jurisdiction, except in compliance with any applicable rules and regulations of any such country or jurisdiction.

**Notice to prospective investors in the EEA**

In relation to each member state of the EEA (each, a "Relevant State"), no securities have been offered or will be offered pursuant to the offering to the public in that Relevant State prior to the publication of a prospectus in relation to the securities which has been approved by the competent authority in that Relevant State or, where appropriate, approved in another Relevant State and notified to the competent authority in that Relevant State, all in accordance with the EU Prospectus Regulation, except that offers of securities may be made to the public in that Relevant State at any time under the following exemptions under the EU Prospectus Regulation:

(a) to any legal entity which is a qualified investor as defined under Article 2(e) of the EU Prospectus Regulation;

(b) to fewer than 150 natural or legal persons (other than qualified investors as defined under the EU Prospectus Regulation), subject to obtaining the prior consent of the representatives for any such offer; or

(c) in any other circumstances falling within Article 1(4) of the EU Prospectus Regulation,

provided that no such offer of securities shall require us or any representative to publish a prospectus pursuant to Article 3 of the EU Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the EU Prospectus Regulation.

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For the purposes of this provision, the expression an "offer to the public" in relation to securities in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and any securities to be offered so as to enable an investor to decide to purchase or subscribe for any securities, and the expression "EU Prospectus Regulation" means Regulation (EU) 2017/1129, as amended.

**Notice to prospective investors in the UK**

No securities have been offered or will be offered pursuant to the offering to the public in the UK prior to the publication of a prospectus in relation to the securities which has been approved by the FCA, all in accordance with the UK Prospectus Regulation, except that offers of securities may be made to the public in the UK at any time under the following exemptions under the UK Prospectus Regulation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) to any legal entity which is a qualified investor as defined under Article 2(e) of the UK Prospectus Regulation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) to fewer than 150 natural or legal persons (other than qualified investors as defined under the UK Prospectus Regulation), subject to obtaining the prior consent of the representatives for any such offer; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) in any other circumstances falling within Section 86 of the FSMA,

provided that no such offer of securities shall require us or any representative to publish a prospectus pursuant to Section 85 of the FSMA or supplement a prospectus pursuant to Article 23 of the UK Prospectus Regulation. For the purposes of this provision, the expression an "offer to the public" in relation to the securities in the UK means the communication in any form and by any means of sufficient information on the terms of the offer and any securities to be offered so as to enable an investor to decide to purchase or subscribe for any securities, the expression "UK Prospectus Regulation" means Regulation (EU) 2017/1129 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended, and the expression "FSMA" means the UK Financial Services and Markets Act 2000, as amended.

In addition, in the UK, this document is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are "qualified investors" (as defined in the Prospectus Regulation) (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, or the Order, and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons") or otherwise in circumstances which have not resulted and will not result in an offer to the public of securities in the UK within the meaning of FSMA.

Any person in the UK that is not a relevant person should not act or rely on the information included in this document or use it as a basis for taking any action. In the UK, any investment or investment activity that this document relates to may be made or taken exclusively by relevant persons.

**Notice to Prospective Investors in Switzerland**

The shares of our common stock may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange ("SIX") or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares of our common stock or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to the offering, the Company, the shares of our common stock have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares of our common stock will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA (FINMA), and the offer of shares of our common stock has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes ("CISA"). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares of our common stock.

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**Notice to Prospective Investors in the Dubai International Financial Centre**

This prospectus supplement relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority ("DFSA"). This prospectus supplement is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus supplement nor taken steps to verify the information set forth herein and has no responsibility for the prospectus supplement. The shares of our common stock to which this prospectus supplement relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares of our common stock offered should conduct their own due diligence on the shares of our common stock. If you do not understand the contents of this prospectus supplement you should consult an authorized financial advisor.

**Notice to Prospective Investors in Australia**

No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission , in relation to the offering. This prospectus supplement does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001 (the "Corporations Act"), and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.

Any offer in Australia of the shares of our common stock may only be made to persons (the "Exempt Investors") who are "sophisticated investors" (within the meaning of section 708(8) of the Corporations Act), "professional investors" (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares of our common stock without disclosure to investors under Chapter 6D of the Corporations Act.

The shares of our common stock applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares of our common stock must observe such Australian on-sale restrictions.

This prospectus supplement contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus supplement is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.

**Notice to Prospective Investors in Hong Kong**

The shares of our common stock have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to "professional investors" as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a "prospectus" as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation or document relating to the shares of our common stock has been or may be issued or has been or may be in the possession of any person for the purposes of issue, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares of our common stock which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.

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**Notice to Prospective Investors in Japan**

The shares of our common stock have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended) and, accordingly, will not be offered or sold, directly or indirectly, in Japan, or for the benefit of any Japanese Person or to others for re-offering or resale, directly or indirectly, in Japan or to any Japanese Person, except in compliance with all applicable laws, regulations and ministerial guidelines promulgated by relevant Japanese governmental or regulatory authorities in effect at the relevant time. For the purposes of this paragraph, "Japanese Person" shall mean any person resident in Japan, including any corporation or other entity organized under the laws of Japan.

**Notice to Prospective Investors in Singapore**

This prospectus supplement has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus supplement and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of shares of our common stock may not be circulated or distributed, nor may the shares of our common stock be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the shares of our common stock are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,

securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares of our common stock pursuant to an offer made under Section 275 of the SFA except:

(c) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;

(d) where no consideration is or will be given for the transfer;

(e) where the transfer is by operation of law;

(f) as specified in Section 276(7) of the SFA; or

(g) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore.

**Notice to Prospective Investors in Canada**

The shares of our common stock may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 *Prospectus Exemptions* or subsection 73.3(1) of the *Securities Act* (Ontario), and are permitted clients, as defined in National Instrument 31-103 *Registration Requirements, Exemptions and Ongoing Registrant Obligations*. Any resale of the shares of our common stock must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus supplement (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for particulars of these rights or consult with a legal advisor.

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Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 *Underwriting Conflicts* (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

**LEGAL MATTERS**

The validity of the common shares offered by this prospectus will be passed upon for us by _______________________. Certain legal matters in connection with this offering will be passed upon for the underwriter by Blank Rome LLP, New York, New York.

**EXPERTS**

The financial statements of Alpha Energy Inc. for the fiscal years ended December 31, 2021 and 2020 have been audited by MaloneBailey, LLP, an independent registered public accounting firm as set forth in its report, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

**WHERE YOU CAN FIND ADDITIONAL INFORMATION**

We have filed with the Securities and Exchange Commission a registration statement on Form S-1, together with any amendments and related exhibits, under the Securities Act, with respect to our shares of common stock offered by this prospectus. The registration statement contains additional information about us and our shares of common stock that we are offering in this prospectus.

We file annual, quarterly and current reports and other information with the Securities and Exchange Commission under the Securities Exchange Act. Our Securities and Exchange Commission filings are available to the public over the Internet at the Securities and Exchange Commission's website at http://www.sec.gov. Access to these electronic filings is available as soon as practicable after filing with the Securities and Exchange Commission. You may also read and copy any document we file at the Securities and Exchange Commission's public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges. You may also request a copy of those filings, excluding exhibits, from us at no cost. Any such request should be addressed to us at: 14143 Denver West Parkway, Suite 100, Golden, CO 80401, Attention: CFO.

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**INDEX TO FINANCIAL STATEMENTS**

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| | |
|:---|:---|
|  | Page |
| Report of Independent Registered Public Accounting Firm (PCAOB ID: 206) | F-1 |
| Consolidated Balance Sheets as of December 31, 2021 and 2020 | F-2 |
| Consolidated Statements of Operations for the Years Ended December 31, 2020 and 2021 | F-3 |
| Consolidated Statements of Stockholders' Deficit for the Years Ended December 31, 2021 and 2020 | F-4 |
| Consolidated Statements of Cash Flows for Years Ended December 31, 2021 and 2020 | F-5 |
| Notes to the Consolidated Financial Statements | F-6 |
| Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 (Unaudited) | F-17 |
| Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited) | F-18 |
| Consolidated Statements of Stockholders' Deficit for the Nine Months Ended September 30, 2022 and 2022 (Unaudited) | F-19 |
| Consolidated Statements of Cash Flows for Nine Months Ended September 30, 2022 and 2021 (Unaudited) | F-20 |
| Notes to the Consolidated Financial Statements (Unaudited) | F-21 |

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**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Shareholders and Board of Directors of

Alpha Energy, Inc.

***Opinion on the Financial Statements***

We have audited the accompanying consolidated balance sheets of Alpha Energy, Inc. and its subsidiary (collectively, the "Company") as of December 31, 2021 and 2020, and the related consolidated statements of operations, stockholders' deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

***Going Concern Matter***

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

***Basis for Opinion***

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

***Critical Audit Matters***

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

*/s/ MaloneBailey, LLP*

<u>www.malonebailey.com</u>

We have served as the Company's auditor since 2020.

Houston, Texas

March 31, 2022

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**ALPHA ENERGY, INC.**

**CONSOLIDATED BALANCE SHEETS**

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| | | |
|:---|:---|:---|
|  | December 31, | December 31, |
|  | 2021 | 2020 |
| **Assets** |  |  |
| Current Assets: |  |  |
| &nbsp;&nbsp;&nbsp; Cash | $217 | $- |
| &nbsp;&nbsp;&nbsp; Prepaids and other current assets | 23750 | 30000 |
| Total current assets | 23967 | 30000 |
| Noncurrent Assets: |  |  |
| Oil and gas properties, unproved, full cost | 145791 | 70000 |
| Total Assets | $169758 | $100000 |
| **Liabilities and Stockholders' Deficit** |  |  |
| Current Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp; Accounts payable and accrued expenses | $270250 | $585732 |
| &nbsp;&nbsp;&nbsp; Accounts payable and accrued expenses - related parties | 228668 | 120568 |
| &nbsp;&nbsp;&nbsp; Interest payable | 77563 | 31295 |
| &nbsp;&nbsp;&nbsp; Short term advances from related parties | 628550 | 116000 |
| &nbsp;&nbsp;&nbsp; Note payable – related party | 65000 | 65000 |
| &nbsp;&nbsp;&nbsp; Short term note |  | 1160000 |
| &nbsp;&nbsp;&nbsp; Convertible note payable | 1210000 |  |
| &nbsp;&nbsp;&nbsp; Derivative liability | 145041 | 96369 |
| Total current liabilities | 2625072 | 2174964 |
| &nbsp;&nbsp;&nbsp; Convertible credit line payable – related party, net of discount of $11,100 and $2,754, respectively | 157228 | 145574 |
| &nbsp;&nbsp;&nbsp; Asset retirement obligation | 918 | 862 |
| Total Liabilities | 2783218 | 2321400 |
| Commitments and contingencies |  |  |
| Stockholders' Deficit: |  |  |
| &nbsp;&nbsp;&nbsp; Preferred stock, 10,000,000 shares authorized: |  |  |
| &nbsp;&nbsp;&nbsp; Series A convertible preferred stock, $0.001 par value, 2,000,000 shares authorized and 0 shares issued and outstanding |  |  |
| &nbsp;&nbsp;&nbsp; Common stock, $0.001 par value, 65,000,000 shares authorized and 18,824,106 and 18,145,428 shares issued and outstanding, respectively | 18824 | 18145 |
| &nbsp;&nbsp;&nbsp; Additional paid-in capital | 2739634 | 2061635 |
| &nbsp;&nbsp;&nbsp; Accumulated deficit | (5371918) | (4301180) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Stockholders' Deficit | (2613460) | (2221400) |
| **Total Liabilities and Stockholders' Deficit** | $169758 | $100000 |

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See accompanying notes to the consolidated financial statements.

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**ALPHA ENERGY, INC**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

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| | | |
|:---|:---|:---|
|  | Year Ended | Year Ended |
|  | December 31, | December 31, |
|  | 2021 | ,2020 |
| &nbsp;&nbsp;&nbsp; Oil and gas sales | $3839 | $1217 |
| &nbsp;&nbsp;&nbsp; Lease operating expenses | 15652 | 2915 |
| &nbsp;&nbsp;&nbsp; Gross loss | (11813) | (1698) |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp; Professional services | 96916 | 87267 |
| &nbsp;&nbsp;&nbsp; Board of director fees | 192000 | 208000 |
| &nbsp;&nbsp;&nbsp; General and administrative | 725832 | 436649 |
| &nbsp;&nbsp;&nbsp; Gain on settlement of accounts payable | (120250) |  |
| &nbsp;&nbsp;&nbsp; Impairment loss |  | 1000000 |
| &nbsp;&nbsp;&nbsp; Total operating expenses | 894498 | 1731916 |
| Loss from operations | (906311) | (1733614) |
| Other income (expense): |  |  |
| &nbsp;&nbsp;&nbsp; Interest expense | (131117) | (238885) |
| &nbsp;&nbsp;&nbsp; Gain on extinguishment of debt |  | 10750 |
| &nbsp;&nbsp;&nbsp; Loss on change in fair value of derivative liabilities | (33310) | (25229) |
| &nbsp;&nbsp;&nbsp; Total other income (expense) | (164427) | (253364) |
| Net loss | $(1070738) | $(1986978) |
| Loss per share: |  |  |
| &nbsp;&nbsp;&nbsp; Basic and diluted | $(0.06) | $(0.11) |
| Weighted average shares outstanding: |  |  |
| &nbsp;&nbsp;&nbsp; Basic and diluted | 18329925 | 17966907 |

---

See accompanying notes to the consolidated financial statements.

------

**ALPHA ENERGY, INC.**

**CONSOLIDATED STATEMENTS OF STOCKHOLDERS**' **DEFICIT**

**FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Common Stock | Common Stock | Additional | Accumulated | Total Stockholders' |
|  | Shares | Amount | Paid-in Capital | Deficit | Deficit |
| **Balance, December 31, 2019**  | 17822428 | $17822 | $1738958 | $(2314202) | $(557422) |
| Stock issued for cash | 75000 | 75 | 74925 |  | 75000 |
| Stock issued for settlement of accounts payable | 5000 | 5 | 4995 |  | 5000 |
| Stock issued as lease acquisition cost for unproved properties | 10000 | 10 | 9990 |  | 10000 |
| Stock-based compensation | 233000 | 233 | 232767 |  | 233000 |
| Net loss |  |  |  | (1986978) | (1986978) |
| **Balance, December 31, 2020**  | 18145428 | 18145 | 2061635 | (4301180) | (2221400) |
| Stock issued for cash | 5000 | 5 | 4995 |  | 5000 |
| Stock issued for settlement of liabilities | 451678 | 452 | 451226 |  | 451678 |
| Stock-based compensation | 222000 | 222 | 221778 |  | 222000 |
| Net loss |  |  |  | (1070738) | (1070738) |
| **Balance, December 31, 2021** | 18824106 | $18824 | $2739634 | $(5371918) | $(2613460) |

---

See accompanying notes to the consolidated financial statements.

------

**ALPHA ENERGY, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | |
|:---|:---|:---|
|  | Year Ended | Year Ended |
|  | December 31, | December 31, |
|  | 2021 | 2020 |
| **Cash Flows from Operating Activities:** |  |  |
| Net loss | $(1070738) | $(1986978) |
| Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp; Stock-based compensation | 262000 | 233000 |
| &nbsp;&nbsp;&nbsp; Bad debt expense | 25000 |  |
| &nbsp;&nbsp;&nbsp; Amortization of debt discount | 7016 | 20493 |
| &nbsp;&nbsp;&nbsp; Loss on change in fair value of derivative liabilities | 33310 | 25229 |
| &nbsp;&nbsp;&nbsp; Gain on extinguishment of debt |  | (10750) |
| &nbsp;&nbsp;&nbsp; Gain on settlement of accounts payable | (120250) |  |
| &nbsp;&nbsp;&nbsp; Impairment loss |  | 1000000 |
| &nbsp;&nbsp;&nbsp; Write off of option contract associated with oil and gas properties | 85500 |  |
| &nbsp;&nbsp;&nbsp; Asset retirement obligation expense | 56 | 76 |
| &nbsp;&nbsp;&nbsp; Default interest added to note payable | 50000 | 200000 |
| &nbsp;&nbsp;&nbsp; Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaids and other current assets | (18750) | (30000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | 235596 | 304263 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable-related party | 108100 | 116881 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest payable | 46268 | 18392 |
| Net cash used in operating activities | (356892) | (109394) |
| **Cash Flows from Investing Activities:** |  |  |
| &nbsp;&nbsp;&nbsp; Deposit for purchase of oil and gas properties | (95791) | (30000) |
| Net cash used in investing activities | (95791) | (30000) |
| **Cash Flows from Financing Activities:** |  |  |
| &nbsp;&nbsp;&nbsp; Proceeds from convertible credit line payable - related party | 20000 | 8500 |
| &nbsp;&nbsp;&nbsp; Payment on convertible credit line payable - related party |  | (4250) |
| &nbsp;&nbsp;&nbsp; Advances from related parties | 427900 | 96000 |
| &nbsp;&nbsp;&nbsp; Proceeds from note payable – related party |  | 65000 |
| &nbsp;&nbsp;&nbsp; Payments on short term note |  | (100000) |
| &nbsp;&nbsp;&nbsp; Payments on short term advances from related parties |  | (856) |
| &nbsp;&nbsp;&nbsp; Proceeds from sale of common stock | 5000 | 75000 |
| Net cash provided by financing activities | 452900 | 139394 |
| Net change in cash and cash equivalents | 217 |  |
| Cash and cash equivalents, at beginning of period |  |  |
| Cash and cash equivalents, at end of period | $217 | $- |
| Supplemental disclosures of cash flow information: |  |  |
| &nbsp;&nbsp;&nbsp; Cash paid for interest | $27834 | $- |
| &nbsp;&nbsp;&nbsp; Cash paid for income taxes | $- | $- |
| Supplemental disclosure of non-cash investing and financing activities: |  |  |
| &nbsp;&nbsp;&nbsp; Unpaid oil and gas assets acquired | $65500 | $1020000 |
| &nbsp;&nbsp;&nbsp; Debt discount on convertible credit line payable related party | $15362 | $5581 |
| &nbsp;&nbsp;&nbsp; Expenses paid on behalf of the Company by related party | $19150 | $13959 |
| &nbsp;&nbsp;&nbsp; Stock issued for settlement of liabilities | $451678 | $5000 |
| &nbsp;&nbsp;&nbsp; Stock issued as lease acquisition cost for unproved properties | $- | $10000 |
| &nbsp;&nbsp;&nbsp; Accrued interest added to note principal | $- | $10000 |

---

See accompanying notes to the consolidated financial statements.

------

ALPHA ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

<u>Organization, Nature of Business and Trade Name</u>

The Company was incorporated in the State of Colorado on September 26, 2013 for the purpose of acquiring and executing on oil and gas leases. The Company has realized limited revenues from its planned business activities.

A summary of significant accounting policies of Alpha Energy, Inc. ("we", "our", the Company) is presented to assist in understanding the Company's financial statements. The accounting policies presented in these footnotes conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the accompanying financial statements. These consolidated financial statements and notes are representations of the Company's management who are responsible for their integrity and objectivity.

<u>Principles of Consolidation</u>

Our consolidated financial statements include our accounts and the accounts of our 100% owned subsidiary, Alpha Energy Texas Operating, LLC. All intercompany transactions and balances have been eliminated. Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

<u>Basis of Presentation and Use of Estimates</u>

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that (1) recorded transactions are valid; (2) all valid transactions are recorded and (3) transactions are recorded in the period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the company for the respective periods being presented.

<u>Revenue and Cost Recognition</u>

Effective January 1, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under the new standard, we recognize revenues when the following criteria are met: (i) persuasive evidence of a contract with a customer exists, (ii) identifiable performance obligations under the contract exist, (iii) the transaction price is determinable for each performance obligation, (iv) the transaction price is allocated to each performance obligation, and (v) the performance obligations are satisfied. We derive all of our revenues from oil and gas production.

The Company records revenues from the sales of natural gas and crude oil when the production is produced and sold, and also when collectability is ensured. The Company may in the future have an interest with other producers in certain properties, in which case the Company will use the sales method to account for gas imbalances. Under this method, revenue is recorded on the basis of natural gas actually sold by the Company. The Company also reduces revenue for other owners' natural gas sold by the Company that cannot be volumetrically balanced in the future due to insufficient remaining reserves. The Company's remaining over- and under-produced gas balancing positions are considered in the Company's proved oil and natural gas reserves. The Company had no gas imbalances at December 31, 2021 or 2020. The Company recorded revenues of $3,839 and $1,217 and costs of revenues totaling $15,652 and $2,915 during the years ended December 31, 2021 and 2020 respectively.

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<u>Basic and Diluted Earnings per share</u>

Net loss per share is provided in accordance with FASB ASC 260-10, "Earnings (Loss) per Share". Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. For the years ended December 31, 2021 and 2020, there were 168,328 and 148,328 shares issuable from convertible credit line payable which were considered for their dilutive effects but concluded to be anti-dilutive, respectively.

<u>Fair Value of Financial Instruments</u>

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Inputs that are generally unobservable and typically reflect management's estimate of assumptions that market participants would use in pricing the asset or liability.

The carrying amount of the Company's financial instruments consisting of accounts payable, notes payable and convertible notes approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.

<u>Derivative Financial Instruments</u> 

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments and measurement of their fair value for accounting purposes. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt under ASC 470, the Company will continue its evaluation process of these instruments as derivative financial instruments under ASC 815. The Company applies the guidance in ASC 815-40-35-12 to determine the order in which each convertible instrument would be evaluated for derivative classification. The Company's sequencing policy is to evaluate for reclassification contracts with the earliest maturity date first. Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives.

<u>Oil and natural gas properties</u>

We account for our oil and natural gas producing activities using the full cost method of accounting as prescribed by the United States Securities and Exchange Commission (SEC). Under this method, subject to a limitation based on estimated value, all costs incurred in the acquisition, exploration, and development of proved oil and natural gas properties, including internal costs directly associated with acquisition, exploration, and development activities, the costs of abandoned properties, dry holes, geophysical costs, and annual lease rentals are capitalized within a cost center. Costs of production and general and administrative corporate costs unrelated to acquisition, exploration, and development activities are expensed as incurred.

------

Costs associated with unevaluated properties are capitalized as oil and natural gas properties but are excluded from the amortization base during the evaluation period. When we determine whether the property has proved recoverable reserves or not, or if there is an impairment, the costs are transferred into the amortization base and thereby become subject to amortization.

We assess all items classified as unevaluated property on at least an annual basis for inclusion in the amortization base. We assess properties on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of the following factors, among others: intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; the assignment of proved reserves; and the economic viability of development if proved reserves are assigned. During any period in which these factors indicate that there would be impairment, or if proved reserves are assigned to a property, the cumulative costs incurred to date for such property are transferred to the amortizable base and are then subject to amortization.

Capitalized costs are included in the amortization base, including estimated asset retirement costs, plus the estimated future expenditures to be incurred in developing proved reserves, net of estimated salvage values. Sales or other dispositions of oil and natural gas properties are accounted for as adjustments to capitalized costs, with no gain or loss recorded unless the ratio of cost to prove reserves would significantly change.

<u>Concentrations of Risk</u>

The Company has 100 % interest in two separate oil and gas leases, all of which are located in the state of Colorado. Environmental and regulatory factors within the state beyond the control of the Company may limit the Company's future production of all its leases.

The Company has a single buyer for the gas produced from one of its leases. The loss of this buyer would have a material adverse impact on our business.

<u>Impairment</u>

The net book value of all capitalized oil and natural gas properties within a cost center, less related deferred income taxes, is subject to a full cost ceiling limitation which is calculated quarterly. Under the ceiling limitation, costs may not exceed an aggregate of the present value of future net revenues attributable to proven oil and natural gas reserves discounted at 10 percent using current prices, plus the lower of cost or market value of unproved properties included in the amortization base, plus the cost of unevaluated properties, less any associated tax effects. Any excess of the net book value, less related deferred tax benefits, over the ceiling is written off as expense. Impairment expense recorded in one period may not be reversed in a subsequent period even though higher oil and gas prices may have increased the ceiling applicable to the subsequent period. On June 25, 2020, the Company entered into a Purchase and Sale Agreement with Pure Oil & Gas, Inc. ("Pure") and ZQH Holding, LLC ("ZQH") to acquire oil and gas assets in Rogers County Oklahoma (the "Project") in consideration of a purchase price of $1,000,000. During the year ended December 31, 2020, the Company fully impaired the Project due to the lack of funds for development.

<u>Asset retirement obligation</u>

We record the fair value of an asset retirement cost, and corresponding liability as part of the cost of the related long-lived asset and the cost is subsequently allocated to expense using a systematic and rational method. We record an asset retirement obligation to reflect our legal obligations related to future plugging and abandonment of our oil and natural gas wells and gathering systems. We estimate the expected cash flow associated with the obligation and discount the amount using a credit-adjusted, risk-free interest rate. At least annually, we reassess the obligation to determine whether a change in the estimated obligation is necessary. We evaluate whether there are indicators that suggest the estimated cash flows underlying the obligation have materially changed. Should those indicators suggest, the estimated obligation may have materially changed on an interim basis (quarterly), we will update our assessment accordingly. Additional retirement obligations increase the liability associated with new oil and natural gas wells and gathering systems as these obligations are incurred. The Company had accrued an asset retirement obligation liability totaling $918 and $862 as of December 31, 2021 and 2020, respectively.

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<u>Income Taxes</u>

The Company accounts for income taxes under ASC 740 *"Income Taxes"* which codified SFAS 109, *"Accounting for Income Taxes"* and FIN 48 "*Accounting for Uncertainty in Income Taxes* – *an Interpretation of FASB Statement No.109.*" Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

<u>Related Parties</u> 

The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.

<u>Recent Accounting Pronouncements</u>

The Company does not believe that any other recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.

<u>Reclassification</u>

Certain reclassifications may have been made to our prior year's financial statements to conform to our current year presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit.

NOTE 2 – GOING CONCERN

The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other current assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. These conditions raise substantial doubt about the Company's ability to continue as a going concern for a period of twelve months from the date of issuance of these financial statements.

Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading, or seeking protection from creditors pursuant to laws or regulations. Accordingly, assets and liabilities are recorded on the basis that the entity will be able to realize its assets and discharge its liabilities in the normal course of business.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish its business plans and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.

During the next year, the Company's foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing, making the requisite filings with the Securities and Exchange Commission, and the payment of expenses associated with oil and gas exploration. The Company may experience a cash shortfall and be required to raise additional capital.

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Historically, it has mostly relied upon internally generated funds and funds from the sale of shares of stock to finance its operations and growth. Management may raise additional capital through future public or private offerings of the Company's stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company's failure to do so could have a material and adverse effect upon it and its shareholders.

NOTE 3 – OIL AND GAS PROPERTIES

The Company entered into a Letter of Intent with Chicorica, LLC on December 13, 2018 and extended the agreement through March 4, 2022. On March 1, 2022, the Company entered into an extension agreement with Chicorica to extend the Closing through August 5, 2022. In return, the Company must pay $30,000 by April 1, 2022, $35,000 by July 8, 2022 and $30,000 by August 5, 2022.

On June 25, 2020, the Company entered into a Purchase and Sale Agreement with Pure Oil & Gas, Inc. ("Pure") and ZQH Holding, LLC ("ZQH") to acquire oil and gas assets in Rogers County Oklahoma (the "Project") in consideration of a purchase price of $1,000,000. Pursuant to the agreement, the Company has taken assignment of all of ZQH and Pure's working interest in the Project and has recognized a note payable to ZQH and Pure as of December 31, 2020 of $1,060,000 consisting of the purchase price of $1,000,000 and the principal and accrued interest on an existing note totaling to $60,000. (See Note 7). The Company, ZQH, and Pure agreed that the sellers' combined working interest in the Project is 87.5%. Pursuant to the Agreement, the Company has taken assignment of all of ZQH and Pure's Working Interest in the Project. The current operator of the Project and owner of the residual Working Interest is Premier Gas Company, LLC ("Premier"). As of December 31, 2020, the Company fully impaired the Project due to the lack of funds for development.

On July 6, 2020, Premier filed a mechanic's lien in Rogers County alleging past unpaid invoices and also claiming incorrectly that Alpha's ownership is 75% rather than 87.5%. No documentation has been provided Alpha of any past due invoices by Premier, Pure, or ZQH, and we intend to contest the lien vigorously.

The Company notes that the Project is included in the lands in eastern Oklahoma affected by a decision of the U.S. Supreme Court issued on July 9, 2020. In McGirt v. Oklahoma the Supreme Court held that a large portion of eastern Oklahoma reserved for the Creek Nation in the 19th century remains Indian Country for purposes of the federal Major Crimes Act. The impact of this decision on title to the lands and leases included in the Project is uncertain at this point, and the Company will continue to monitor developments concerning the effects of this decision. The Company has subsequently determined that the assignment appears to represent no actual, tangible assets. The Company has notified ZQH and Pure of these findings and informed them of our decision to not pursue the Project. ZQH and Pure have hired legal counsel to examine the question of whether Alpha can legally withdraw from the PSA even with no actual asset.

On June 30, 2020, the Company entered into an option Agreement with Progressive Well Service, LLC ("Progressive") to acquire oil and gas assets in Lincoln and Logan Counties in Central Oklahoma (the "Coral Project", called the "Logan 1 Project" in the Agreement). The agreement gives the Company until December 31, 2020 to exercise its option (the "Option Period"). During the Option Period, Progressive may not sell the Coral Project to any third party. In return for this exclusivity, the Company issued 10,000 shares of its common stock with a fair value of $10,000, such shares to bear a legend restricting sale during the Option Period. At closing the Company shall make a cash payment of $600,000 (less Monthly Extension Payments) to Progressive (the "Project Payment") and guarantee to Progressive a further payment of 3% of the net revenue stream from any new wells drilled in the Coral Project (the "Production Payment") until Progressive has received an additional $350,000. Since December 2020, the Company and Progressive have entered into various Extension Agreements, the current one being dated June 30th, 2021 (the "Extension Agreement"). The Extension Agreement extends the period by which Closing must occur through November 30, 2021, in return for which the Company makes a monthly payment of ten thousand dollars ($10,000), which sum is to be applied toward the Project Payment. On November 30, 2021, the Company and Progressive verbally agreed to extend the closing to February 2022. On March 9, 2022, the Company closed on the acquisition of 34 well bores and related assets under the PSA. We are entitled to receive the proceeds of production from January 1, 2022 under the terms of the PSA and Progressive is required to operate the properties and transfer ownership and royalty decks to Company following a one-month transition period. Under the PSA we are obligated to make a further payment of three (3%) percent of the net revenue from new wells drilled until Progressive receives an additional $350,000.

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On September 8, 2020, the Company entered into an Option Agreement with Kadence Petroleum, LLC. ("Kadence") to acquire oil and gas assets in Logan County in Central Oklahoma, called the "Logan 2 Project" in the Agreement). The Agreement gives the Company until February 8, 2021 to exercise its option (the "Option Period"). During the Option Period, Kadence may not sell the Logan 2 Project to any third party. In return for this exclusivity, the Company will pay $10,000 per month. The Company paid $10,000 to Brian Tribble, Managing Member of Kadence, through AEI Acquisition, LLC revolving credit note, on September 18, 2020. At closing, Alpha shall tender to Kadence a cash payment of $350,000 (the "Project Payment"). Alpha shall agree at Closing to make a monthly payment equal to 3% of the net revenue stream from any new wells (not workovers, restarts, or recompletions) drilled in the Project area after the Closing until such time as Kadence shall have accrued $800,000 from such new wells (the "Production Payment"). Together, the Option Payment, Production Payment, and Project Payment shall satisfy the Purchase Price. On March 3, 2021, the Company amended the agreement until May 1, 2021, with a $10,000 monthly payment in January through April 2021. The Company had advanced $85,500 in option payments through September 30, 2021. The agreement is cancelled, and the Company wrote off the $85,500 as of September 30, 2021.

Oil and gas properties at December 31, 2021 and 2020 consisted of the following:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Balance** |  |  | **Balance** |
| **Account** | **12/31/2020** | **Additions**  | **Impairment**  | **12/31/2021** |
| Leasehold Improvements - Chico Rica, LLC | $10000 | $- | $- | $10000 |
| Leasehold Improvements - Undeveloped |  | 15791 |  | 15791 |
| Lease Acquisition Costs - Logan County Project I | 10000 | 110000 |  | 120000 |
| Lease Acquisition Costs - Logan County Project II | 50000 | 35500 | 85500 |  |
| Total oil and gas related assets | $70000 | $161291 | $85500 | $145791 |

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NOTE 4 – INCOME TAXES

The Company provides for income taxes under FASB ASC 740, Accounting for Income Taxes. FASB ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently.

FASB ASC 740 requires the reduction of deferred tax assets by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company's opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded.

The total deferred tax asset was approximately $626,000 and $424,000 as of December 31, 2021 and 2020, respectively which is calculated by multiplying a 25.63% estimated tax rate by the cumulative net operating loss (NOL) of approximately $2,440,000 and $1,655,000, respectively.

Due to the enactment of the Tax Reform Act of 2017, we have calculated our deferred tax assets using an estimated corporate tax rate of 25.63%. US Tax codes and laws may be subject to further reform or adjustment which may have a material impact to the Company's deferred tax assets and liabilities.

The Company is subject to United States federal income taxes at an approximate rate of 21% and state income taxes at an approximate rate of 4.63%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company's income tax expense as reported is as follows:

The net deferred tax assets consist of the following:

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| | | |
|:---|:---|:---|
|  | 2021 | 2020 |
| Deferred income tax assets |  |  |
| Net operating loss carry forward | $626000 | $424000 |
| Valuation allowance | (626000) | (424000) |
| Net deferred income tax asset | $- | $- |

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A reconciliation of income taxes computed at the statutory rate is as follows:

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| | | |
|:---|:---|:---|
|  | 2021 | 2020 |
| Tax benefit at effective rate | $202000 | $202000 |
| Change in valuation allowance | (202000) | (202000) |
| Provision for income taxes | $- | $- |

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The Company has an operating loss carry forward of approximately $2,440,000.

NOTE 5 – COMMON STOCK

The Company is authorized to issue up to 10,000,000 shares of $0.001 par value preferred stock and 65,000,000 shares of $0.001 par value common stock. The Board of Directors authorized the issuance of up to 2,000,000 share of Series A convertible preferred stock with a par value of $0.001.

The Company compensates its each director with 4,000 shares of common stock each month. During the years ended December 31, 2021 and 2020, the Company issued 192,000 and 208,000 shares of common stock valued at $192,000 and $208,000, respectively, as board of director compensation.

The Company pays its CFO a yearly bonus of 25,000 shares of common stock. During the years ended December 31, 2021 and 2020, the Company issued 25,000 shares of common stock to the CFO with a fair value of $25,000.

The Company issued its CFO 361,678 shares of common stock on December 31, 2021 valued at $1.00 per share, to settle $361,678 of accrued officer compensation.

During the year ended December 31, 2021, the Company reclassified 40,000 shares issued for services in a prior year, which are currently in dispute, to accounts payable.

During the year ended December 31, 2021, the Company issued 90,000 shares of common stock with a fair value of $90,000 to settle accounts payable of $210,250. The Company recognized a gain of $120,250 on settlement of accounts payable.

During the years ended December 31, 2021 and 2020, the Company sold 5,000 and 75,000 shares of the common stock for total proceeds of $5,000 and $75,000, respectively.

On April 1, 2021, the Company entered into a month-to-month consulting agreement with Kelloff Oil & Gas, LLC for consulting services that includes cash compensation of $10,000 and the issuance of 5,000 shares of common stock per month. The Company may terminate the agreement at any moment with a ten-day notice. During the year ended December 31, 2021, the Company issued 45,000 common shares and recognized $45,000 of stock-based compensation related to the agreement.

During the year ended December 31, 2020, the Company issued 10,000 shares of common stock with a fair value of $10,000 for lease acquisition cost for unproved properties.

During the year ended December 31, 2020, the Company issued 5,000 shares of common stock with a fair value of $5,000 to settle outstanding accounts payable balance.

On August 6, 2020 the Board authorized an additional 550,000 shares of common stock for sale at $1.00 per share bringing the total to 1,300,000 shares.

NOTE 6 – RELATED PARTY TRANSACTIONS

The Company received advances from related parties totaling $427,900 and $96,000 and repaid $0 and $856 during the years ended December 31, 2021 and 2020, respectively. During the years ended December 31, 2021 and 2020, related parties paid $19,150 and $13,959 of expense on behalf of the Company, and $65,500 and $1,020,000 for unpaid oil and gas assets acquired. The advances from related parties are not convertible to common stock, bear no interest and are due on demand. As of December 31, 2021 and 2020, there was $628,550 and $116,000 of short-term advances due to related parties, respectively.

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As of December 31, 2021 there was $228,668 of accounts payable related parties which consisted of $208,484 due to Leaverite Exploration for Interim President Jay Leaver, $4,394 due to CFO John Lepin, $10,000 due Kelloff Oil &Gas, LLC for Vice President Joe Kelloff and $5,790 due to Staley Engineering LLC for consulting services.

As of December 31, 2020 there was $120,568 of accounts payable related parties which consisted of $110,894 due to Leaverite Exploration for Interim President Jay Leaver, $3,884 due to CFO John Lepin and $5,790 due to Staley Engineering LLC for consulting services.

On December 3, 2020, the Company executed a promissory note for $65,000 with the President of the Company. The unsecured note matures three years from date of issue and bears interest at 5.00% per annum. As of December 31, 2021 and 2020, the note payable related party balance was $65,000 with accrued interest of $13,003 and $0, respectively.

The Chief Financial Officer allows the use of his residence as an office for the Company at no charge.

A board member of the Company acts as corporate council to Company at no charge, other than board of director fees.

NOTE 7– NOTES PAYABLE AND CONVERTIBLE NOTE PAYABLE

On March 30, 2019, the Company executed a promissory note for $50,000 to ZQH (75%) and Pure (25%). The due date of the note is April 30, 2019 and has an interest rate of $50 per day. The note is for an escrow payment made directly to Premier Gas Company, LLC to hold the Purchase and Sale Agreement dated January 29, 2019. The note is secured by 50,000 shares of the Company's common stock at $1 per share. On June 25, 2020, the Company entered into a Purchase and Sale Agreement ("PSA") with Pure and ZQH to acquire oil and gas assets in Oklahoma (the "Rogers Project") in consideration of a purchase price of $1,000,000. In connection with the purchase, the $50,000 note and accrued interest of $10,000 was added to the purchase price resulting in a total note payable balance of $1,060,000. During the year ended December 31, 2020, $10,750 of accrued interest which was previously outstanding was discharged and recorded as a gain on extinguishment of debt. The note payable of $1,060,000 was due to be paid on or before July 31, 2020 but remains outstanding to date. The balance of the note will increase by $50,000 per month thereafter up to a maximum amount of $200,000 through December 1, 2020. As of December 31, 2020, the Company recognized $200,000 of default interest that was added to the principal and made payments of $100,000 for a total payable of $1,160,000. If the purchase price is not fully paid on or before December 1, 2020, ZQH and Pure have the option to convert the balance outstanding into the Company's common stock at a conversion price of $1.00 per share and the note will also be subject to a monthly interest of 1%. The Company, Pure, and ZQH have entered into various Extension Agreements, the current one of which is dated March 28th, 2021 (the "Extension Agreement"). The Extension Agreement prevents Pure and ZQH from taking stock rather than cash through June 1, 2021, in return for which Company makes a monthly interest payment to ZQH and Pure of $10,083, which represents 1% annual interest on the Purchase Price, compounded monthly. The Extension Agreement allows the Company to extend that period beyond June 1, 2021 under similar terms. No further Extension Agreement has been entered into to date. Per the extension agreement, ZQH and Pure have the option to convert all or part of the purchase price to the Company's common stock at $1.00 per share after June 1, 2021. The Company evaluated the conversion option and concluded a beneficial conversion feature and embedded derivative were not present at the date of conversion. As a result of the conversion option on June 1, 2021, the Company reclassified the note payable to convertible note payable.

During the year ended December 31, 2021, the Company recognized $50,000 of default interest that was added to the principal of the note payable. As of December 31, 2021, the convertible note payable balance was $1,210,000 with accrued interest of $22,882. The Company is in legal discussions with ZQH to relieve the loan as the properties in the purchase agreement were not held by title.

------

**NOTE 8** – **CONVERTIBLE CREDIT LINE PAYABLE AND SENIOR SECURED CONVERTIBLE NOTES PAYABLE** – **RELATED PARTY**

*Convertible Credit Line Payable*

On June 1, 2021, the Company entered into a new convertible credit line agreement to borrow up to $1,500,000 of advances and matures on June 1, 2023. The outstanding principal balance accrues interest at a rate of 7% per annum and is convertible into shares of common stock.

The Company analyzed the conversion option in the convertible line of credit for derivative accounting consideration under ASC 815, Derivative and Hedging, and determined that the transaction does qualify for derivative treatment. The Company evaluated the new convertible credit line for debt modification in accordance with ASC 470-50 and concluded that the debt qualified for debt modification as the borrowing capacity under the new credit line is greater than the borrowing capacity under the original credit line. There were no fees paid to the creditor and no unamortized deferred costs on the original credit line. Accordingly, no expense was recognized in connection with the transaction.

NOTE 9 – DERIVATIVE LIABILITY

As discussed in Note 1, on a recurring basis, we measure certain financial assets and liabilities based upon the fair value hierarchy. The following table presents information about the Company's derivative liabilities measured at fair value on a recurring basis as of December 31, 2021 and 2020:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | | | Fair Value |
|  | | | | at |
|  | | | | December |
|  | | | | 31, |
|  | Level 1 | Level 2 | Level 3 | 2020 |
| Liabilities |  |  |  |  |
| Derivative Liability |  |  | $96369 | $96369 |

---

------

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | | | Fair Value |
|  | | | | at |
|  | | | | December |
|  | | | | 31, |
|  | Level 1 | Level 2 | Level 3 | 2021 |
| Liabilities |  |  |  |  |
| Derivative Liability |  |  | $145041 | $145041 |

---

As of December 31, 2021, and 2020, the Company had a $145,041 and $96,369 derivative liability balance on the consolidated balance sheets, respectively and recorded a loss from derivative liability fair value adjustment of $33,310 and $25,229 during the years ended December 31, 2021 and 2020, respectively. The Company assessed its outstanding convertible credit line payable as summarized in Note 8 – Convertible Credit Line Payable- Related Party and determined certain convertible credit lines payable with variable conversion features contain embedded derivatives and are therefore accounted for at fair value under ASC 920, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments.

Utilizing Level 3 Inputs, the Company recorded fair market value adjustments related to the derivative liability for the year ended December 31, 2020 of $25,229. An additional debt discount of $5,851 was recorded during the year ended December 31, 2020 using the following assumptions: exercise price of $1.00, 19,000 common share equivalents, and a fair value of the common stock of $1.00 per share. The fair market value adjustments as of December 31, 2020 were calculated utilizing the Black-Scholes option pricing model using the following assumptions: exercise price of $1.00, computed volatility 127%, discount rate 0.13%, 148,328 common share equivalents, and a fair value of the common stock of $1.00 per share.

Utilizing Level 3 Inputs, the Company recorded fair market value adjustments related to the derivative liability for the year ended December 31, 2021 of $33,310. An additional debt discount of $15,362 was recorded during the year ended December 31, 2021 using the following assumptions: exercise price of $1.00, 20,000 common share equivalents, and a fair value of the common stock of $1.00 per share. The fair market value adjustments as of December 31, 2021 were calculated utilizing the Black-Scholes option pricing model using the following assumptions: exercise price of $1.00, computed volatility 248.59%, discount rate 0.73%, 168,328 common share equivalents, and a fair value of the common stock of $1.00 per share.

A summary of the activity of the derivative liability is shown below:

---

| | |
|:---|:---|
| Balance at December 31, 2019 | $65289 |
| Derivative liabilities recorded | 5851 |
| Loss on change in derivative fair value adjustment | 25229 |
| Balance at December 31, 2020 | $96369 |
| Derivative liabilities recorded | 15362 |
| Loss on change in derivative fair value adjustment | 33310 |
| Balance at December 31, 2021 | $145041 |

---

NOTE 10 – COMMITMENTS AND CONTINGENCIES

Effective November 1, 2018, the Company entered into an employment contract with the President and CFO of the Company. The President will receive an annual salary of $120,000, increasing 10% per year for five years. In addition, the employee will receive $750 per month for health insurance, will receive a year-end bonus of 25,000 shares of the Company stock and will receive a .03125% overriding royalty interest in each future producing well. As of December 31, 2021 and 2020, the Company had $0 and $212,985 accrued compensation related to this contract, respectively.

------

NOTE 11 – SUBSEQUENT EVENTS

On February 17, 2022, the Company entered into a Purchase and Sale Agreement ("PSA") with Progressive. Under the terms of the PSA, the Company will acquire leases and related assets to certain oil and gas wells located in Logan County in Central Oklahoma as more fully descried in the PSA. Under the PSA the Company is obligated to make an additional cash payment of $490,000 after giving effect to one hundred and ten thousand dollars previously paid for the option and extension payments (see Note 3), and a further payment of three (3%) percent of the net revenue from new wells drilled until Progressive receives $350,000. The acquired leases under the PSA comprise approximately 2,080 gross acres of developed and undeveloped proven production in the Cherokee Uplift in central Oklahoma, including 34 well bores, six of which are active. On March 9, 2022, the Company closed on the acquisition of 34 well bores and related assets under the PSA. We are entitled to receive the proceeds of production from January 1, 2022 under the terms of the PSA and Progressive is required to operate the properties and transfer ownership and royalty decks to Company following a one-month transition period. Under the PSA we are obligated to make a further payment of three (3%) percent of the net revenue from new wells drilled until Progressive receives an additional $350,000.

On February 25, 2022, the Company entered into secured senior secured convertible note for the purchase and sale of convertible promissory notes ("Convertible Note") in the principal amount of $5,000,000. The Senior Convertible Note is convertible at any time after the date of issuance into shares of the Company's common stock at a conversion price of $5.00 per share. Upon conversion of the convertible note into the Company's common stock, the noteholder would be issued 1,000,000 shares of the Company's common stock. Interest on the Convertible Note shall be paid to the investors at a rate of 7.25% per annum, paid on a quarterly basis, and the maturity date of the Convertible Note is two years after the issuance date. The Convertible Note is secured by certain oil and gas leases, lands, minerals and other properties of the Company, subject to prior liens and security interests. On the same day, the assigned advances of $413,206 from a related party were transferred to the Convertible Note. As of the date of this filing, the Company has not received in cash proceeds from the convertible note.

On February 23, 2022, the Company amended the December 3, 2020 promissory note with, Mr. Leaver, President of the Company. As amended, the principal balance of note will be $406,750, which includes the original promissory of $65,000, advances of $325,580 and $16,170 in accrued interest. Of the $325,580 in advances, $31,280 were advanced subsequent to December 31, 2021. The promissory note matures on February 23, 2025 and bears interest at 5% per annum. In February 2022, Mr. Leaver advanced the Company an additional $500,000. On February 25, 2022, Mr. Leaver assigned the $406,750 promissory note and $500,000 advance to 20 Shekels, an affiliated Company. On the same day, the assigned promissory note and advance totaling $906,750 were transferred into a secured senior secured convertible note. The convertible note bears interest at 7.25% and matures on February 25, 2024. The note is convertible into shares of the Company at $5.00 per share.

On January 28, 2019, the Company entered into a Project Sale Agreement (the "PSA") with Visionary Resources, LLC. ("Visionary"). Visionary has developed an oil and gas exploration project in northwestern Texas (the "Battlewagon Project"). The Battlewagon Project includes several prospective areas, and the Company is interested in exploring these areas and utilizing Visionary's geophysical and other data and expertise. The Company agreed to pay the Project Fee of two hundred thousand dollars ($200,000) by March 31, 2020. The Company and Visionary have entered into various extension agreements, the current one being dated January 4, 2021 (the "Extension Agreement"). On January 1, 2022, the Company entered an Extension Agreement with Visionary, the Company may acquire access to the intellectual property owned or licensed by Visionary for a cash payment of two hundred thousand dollars ($200,000) on or before March 4, 2022. The agreement was further extended to September 2, 2022.

Subsequent to December 31, 2021, the Company has received cash proceeds of $1,231,500 from unexecuted subscription agreements. The unexecuted agreements are to sell common stock at $1.00 per share.

------

**Alpha Energy, Inc.** 

**Consolidated Balance Sheets** 

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | September 30, | December 31, |
|  | 2022 | 2021 |
| **Assets** |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp; Cash and cash equivalents | $742087 | $217 |
| &nbsp;&nbsp;&nbsp; Joint interest billing receivable | 7940 |  |
| &nbsp;&nbsp;&nbsp; Prepaid assets and other current assets | 75000 | 23750 |
| Total current assets | 825027 | 23967 |
| Noncurrent assets: |  |  |
| Property and equipment, net | 54378 |  |
| Oil and gas property, unproved, full cost | 1311003 | 145791 |
| Total noncurrent assets | 1365381 | 145791 |
| Total assets | $2190408 | $169758 |
| **Liabilities and Stockholders' Deficit** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp; Accounts payable and accrued expenses | $186421 | $270250 |
| &nbsp;&nbsp;&nbsp; Accounts payable and accrued expenses - related parties | 203484 | 228668 |
| &nbsp;&nbsp;&nbsp; Interest payable - related parties | 83817 | 77563 |
| &nbsp;&nbsp;&nbsp; Advances from related parties |  | 628550 |
| &nbsp;&nbsp;&nbsp; Note payable - related party |  | 65000 |
| &nbsp;&nbsp;&nbsp; Derivative liability | 275120 | 145041 |
| &nbsp;&nbsp;&nbsp; Convertible credit line payable – related party, net of discount of $5,705 | 132623 |  |
| &nbsp;&nbsp;&nbsp; Convertible note payable | 1210000 | 1210000 |
| Total current liabilities | 2091465 | 2625072 |
| &nbsp;&nbsp;&nbsp; Convertible credit line payable – related party, net of discount $11,100 |  | 157228 |
| &nbsp;&nbsp;&nbsp; Senior secured convertible notes payable, related party, net of discount of $146,504 | 1173456 |  |
| &nbsp;&nbsp;&nbsp; Asset retirement obligation | 918 | 918 |
| Total liabilities | 3265839 | 2783218 |
| Commitments and contingencies |  |  |
| Stockholders' deficit: |  |  |
| Preferred stock, 10,000,000 shares authorized: |  |  |
| &nbsp;&nbsp;&nbsp; Series A convertible preferred stock, $0.001 par value, 2,000,000 shares authorized and 0 shares issued and outstanding |  |  |
| &nbsp;&nbsp;&nbsp; Common stock, $0.001 par value, 65,000,000 shares authorized and 21,612,326 and 18,824,106 shares issued and outstanding, respectively | 21612 | 18824 |
| &nbsp;&nbsp;&nbsp; Additional paid-in capital | 5479066 | 2739634 |
| &nbsp;&nbsp;&nbsp; Accumulated deficit | (6576109) | (5371918) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total stockholders' deficit | (1075431) | (2613460) |
| Total liabilities and stockholders' deficit | $2190408 | $169758 |

---

See accompanying notes to the unaudited consolidated financial statements.

------

**Alpha Energy, Inc.** 

**Consolidated Statements of Operations** 

**For the three and nine months ended September 30, 2022 and 2021**

**(Unaudited)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three months ended | Three months ended | Nine months ended | Nine months ended |
|  | September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 |
| &nbsp;&nbsp;&nbsp; Oil and gas sales | $138900 | $2369 | $144139 | $2369 |
| &nbsp;&nbsp;&nbsp; Lease operating expenses | 229099 | 7303 | 278533 | 7303 |
| &nbsp;&nbsp;&nbsp; Gross loss | (90199) | (4934) | (134394) | (4934) |
| Operating expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Professional services | 100775 | 22793 | 310468 | 70355 |
| &nbsp;&nbsp;&nbsp; Board of director fees | 36000 | 48000 | 120000 | 144000 |
| &nbsp;&nbsp;&nbsp; General and administrative | 215859 | 173039 | 580453 | 531860 |
| &nbsp;&nbsp;&nbsp; Gain on settlement of accounts payable |  |  |  | (120250) |
| &nbsp;&nbsp;&nbsp; Total operating expenses | 352634 | 243832 | 1010921 | 625965 |
| Loss from operations | (442833) | (248766) | (1145315) | (630899) |
| Other income (expense): |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Interest expense | (56871) | (5219) | (137273) | (114806) |
| &nbsp;&nbsp;&nbsp; Gain (loss) on change in fair value of derivative liabilities | 66186 | (19200) | 78397 | (24299) |
| &nbsp;&nbsp;&nbsp; Total other income (expense) | 9315 | (24419) | (58876) | (139105) |
| Net loss | $(433518) | $(273185) | $(1204191) | $(770004) |
| Loss per share: |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Basic | $(0.02) | $(0.01) | $(0.06) | $(0.04) |
| &nbsp;&nbsp;&nbsp; Diluted | $(0.02) | $(0.01) | $(0.06) | $(0.04) |
| Weighted average shares outstanding: |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Basic | 19900856 | 18377318 | 19184342 | 18292604 |
| &nbsp;&nbsp;&nbsp; Diluted | 20303176 | 18377318 | 19586662 | 18292604 |

---

See accompanying notes to the unaudited consolidated financial statements.

------

**Alpha Energy, Inc.**

**Consolidated Statements of Stockholders' Deficit**

**For the nine-months ended September 30, 2022 and 2021**

&nbsp;&nbsp;&nbsp;&nbsp;**(Unaudited)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | | | Additional | | Total |
|  | Common Stock | Common Stock | Paid-in | Accumulated | Stockholders' |
|  | Shares | Amount | Capital | Deficit | Deficit |
| **Balance, December 31, 2021** | 18824106 | $18824 | $2739634 | $(5371918) | $(2613460) |
|  |  | . |  |  |  |
| Stock-based compensation |  |  | 63000 |  | 63000 |
| Net loss |  |  |  | (376138) | (376138) |
| **Balance, March 31, 2022** | 18824106 | 18824 | 2802634 | (5748056) | (2926598) |
| Stock-based compensation |  |  | 51000 |  | 51000 |
| Net loss |  |  |  | (394535) | (394535) |
| **Balance, June 30, 2022** | 18824106 | 18824 | 2853634 | (6142591) | (3270133) |
| Stock issued for cash | 2504500 | 2504 | 2501996 |  | 2504500 |
| Stock-based compensation | 283720 | 284 | 123436 |  | 123720 |
| Net loss |  |  |  | (433518) | (433518) |
| **Balance, September 30, 2022** | 21612326 | $21612 | $5479066 | $(6576109) | $(1075431) |
| **Balance, December 31, 2020** | 18145428 | $18145 | $2061635 | $(4301180) | $(2221400) |
| Stock issued for settlement of liabilities | 90000 | 90 | 89910 |  | 90000 |
| Stock-based compensation | 48000 | 48 | 47952 |  | 48000 |
| Net loss |  |  |  | (229780) | (229780) |
| **Balance, March 31, 2021** | 18283428 | 18283 | 2199497 | (4530960) | (2313180) |
| Stock issued for cash | 5000 | 5 | 4995 |  | 5000 |
| Stock-based compensation | 63000 | 63 | 62937 |  | 63000 |
| Net loss |  |  |  | (267039) | (267039) |
| **Balance, June 30, 2021** | 18351428 | 18351 | 2267429 | (4797999) | (2512219) |
| Stock-based compensation | 63000 | 63 | 62937 |  | 63000 |
| Net loss |  |  |  | (273185) | (273185) |
| **Balance, September 30, 2021** | 18414428 | $18414 | $2330366 | $(5071184) | $(2722404) |

---

See accompanying notes to the unaudited consolidated financial statements.

------

Alpha Energy, Inc.

Consolidated Statements of Cash Flows

For the nine months ended September 30, 2022 and 2021(Unaudited)

---

| | | |
|:---|:---|:---|
|  | September 30, | September 30, |
|  | 2022 | 2021 |
| **Cash flows from operating activities:** |  |  |
| Net loss | $(1204191) | $(770004) |
| Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation expense | 922 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock-based compensation | 237720 | 174000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of debt discount | 67368 | 4215 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Gain) loss on change in fair value of derivative liabilities | (78397) | 24299 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on settlement of accounts payable |  | (120250) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Write off of option contract associated with oil and gas properties |  | 85500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset retirement obligation expense |  | 56 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Default interest added to note payable |  | 50000 |
| Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | (7940) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets | (51250) | 25000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | (95928) | 152778 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable-related party | (13085) | 60351 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest payable | 22427 | 32757 |
| Net cash used in operating activities | (1122354) | (281298) |
| **Cash flows from investing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash paid for purchase of equipment | (55300) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acquisition of oil and gas property | (1165212) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deposits for purchase of oil and gas properties |  | (60000) |
| Net cash used in investing activities | (1220512) | (60000) |
| **Cash flows from financing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from advances, related parties | 120236 | 317200 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Repayment of advances, related parties | (10000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from convertible credit line payable - related party |  | 20000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payments on convertible credit line payable - related party | (30000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from senior secured convertible notes payable, related party | 500000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Proceeds from the sale of common stock | 2504500 | 5000 |
| Net cash provided by financing activities | 3084736 | 342200 |
| Net change in cash and cash equivalents | 741870 | 902 |
| Cash and cash equivalents, at beginning of period | 217 |  |
| Cash and cash equivalents, at end of period | $742087 | $902 |
| Supplemental disclosures of cash flow information: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash paid for interest | $23596 | $27834 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash paid for income taxes | $- | $- |
| Supplemental disclosure of non-cash investing and financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Expenses paid on behalf of the Company by related party | $- | $17760 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Oil and gas payments made by related party on behalf of the Company | $- | $65500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock issued for settlement of accounts payable | $- | $90000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debt discount on senior secured convertible notes payable - related party | $208476 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Advances and other liabilities converted to senior secured convertible notes payable, related party | $819956 | $- |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debt discount from derivative liability | $- | $15362 |

---

See accompanying notes to the unaudited consolidated financial statements.

------

**Alpha Energy, Inc.**

**Notes to the Consolidated Financial Statements**

**(Unaudited)**

**NOTE 1** – **BASIS OF PRESENTATION**

The interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and should be read in conjunction with the audited consolidated financial statements and notes thereto for the years ended December 31, 2021 and 2020 which are included on the Form 10-K filed on April 4, 2022. In the opinion of management, all adjustments which include normal recurring adjustments, necessary to present fairly the financial position, results of operations, and cash flows for the periods shown have been reflected herein. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the operating results for the full year. Certain information and footnote disclosures which would substantially duplicate the disclosures contained in the audited consolidated financial statements for the years ended December 31, 2021, and 2020 have been omitted.

<u>Principles of Consolidation</u>

Our consolidated financial statements include our accounts and the accounts of our 100% owned subsidiary, Alpha Energy Texas Operating, LLC. All intercompany transactions and balances have been eliminated.

<u>Use of Estimates</u>

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that (1) recorded transactions are valid; (2) all valid transactions are recorded and (3) transactions are recorded in the period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the company for the respective periods being presented.

<u>Basic and Diluted Loss per share</u>

Net loss per share is provided in accordance with FASB ASC 260-10, "Earnings (Loss) per Share". Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. For the three and nine months ended September 30, 2022 and 2021, there were 263,992 and 0 shares issuable from the senior secured convertible notes payable and 168,328 shares issuable from the convertible credit line payable which were considered for their dilutive effects but were determined to be anti-dilutive due to the Company's net loss, respectively.

The reconciliation of basic and diluted loss per share is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three months ended | Three months ended | Nine months ended | Nine months ended |
|  | September | September | September | September |
|  | 30, 2022 | 30, 2021 | 30, 2022 | 30, 2021 |
| Basic net loss | $(433518) | $(273185) | $(1204191) | $(770004) |
| Add back: (Gain) loss on change in fair value of derivative liabilities | (66186) |  | (78397) |  |
| Add back: Convertible debt interest | 24121 |  | 56596 |  |
| Diluted net loss | $(475583) | $(273185) | $(1225992) | $(770004) |
| Basic and dilutive shares: |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Weighted average basic shares outstanding | 19900856 | 18377318 | 19184342 | 18292604 |
| &nbsp;&nbsp;&nbsp; Shares issuable from convertible credit line payable | 138328 |  | 138328 |  |
| &nbsp;&nbsp;&nbsp; Shares issuable from senior secured convertible notes payable | 263992 |  | 263992 |  |
| &nbsp;&nbsp;&nbsp; Dilutive shares | 20303176 | 18377318 | 19586662 | 18292604 |
| Loss per share: |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Basic | $(0.02) | $(0.01) | $(0.06) | $(0.04) |
| &nbsp;&nbsp;&nbsp; Diluted | $(0.02) | $(0.01) | $(0.06) | $(0.04) |

---

------

<u>Fair Value of Financial Instruments</u>

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Inputs that are generally unobservable and typically reflect management's estimate of assumptions that market participants would use in pricing the asset or liability.

The carrying amount of the Company's financial instruments consisting of cash and cash equivalents, accounts payable, notes payable and convertible notes approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.

<u>Reclassification</u> 

Certain reclassifications may have been made to our prior year's financial statements to conform to our current year presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit.

<u>Recently Issued Accounting Standards Not Yet Adopted</u>

The Company has reviewed all recently issued, but not yet adopted, accounting standards, in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that there are no recently issued accounting pronouncements that will have a significant effect on its financial statements.

------

**NOTE 2** – **GOING CONCERN**

The Company's interim unaudited consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has minimal cash or other current assets and does not have an established ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

**NOTE 3** – **OIL AND GAS PROPERTIES**

On June 30, 2020, the Company entered into an option Agreement with Progressive Well Service, LLC ("Progressive") to acquire oil and gas assets in Lincoln and Logan Counties in Central Oklahoma. On March 9, 2022, the Company closed on the acquisition of 34 well bores and related assets under the PSA with cash payments of $726,298. The Company is entitled to receive the proceeds of production from January 1, 2022 under the terms of the PSA and Progressive is required to operate the properties and transfer ownership and royalty decks to Company following a one-month transition period. Under the PSA we are obligated to make a further payment of three (3%) percent of the net revenue from new wells drilled until Progressive receives an additional $350,000.

The Company entered into a Letter of Intent with Chicorica, LLC on December 13, 2018 and extended the agreement through March 4, 2022. On March 1, 2022, the Company entered into an extension agreement with Chicorica to extend the Closing through August 5, 2022. In return, the Company must pay $30,000 by April 1, 2022, $35,000 by July 8, 2022 and $30,000 by August 5, 2022. During the nine months ended September 30, 2022, the Company paid $30,000 related to the extension agreement.

**NOTE 4** – **RELATED PARTY TRANSACTIONS**

*Advances from Related Party*

The Company received advances from AEI Management, Inc., a Company owned by a significant shareholder, totaling $88,956 and $185,860 during the nine months ended September 30, 2022 and 2021, respectively. The advances are unsecured, non-interest bearing and are payable on demand. During the nine months ended September 30, 2022, the Company repaid $10,000 of the advances and converted $413,206 of advances to a senior secured convertible note due February 24, 2024.

The Company received advances from Jay Leaver, President of the Company, totaling $31,280 and $149,100 during the nine months ended September 30, 2022 and 2021, respectively. The advances are unsecured, non-interest bearing and is payable on demand. During the nine months ended September 30, 2022, the Company converted $325,580 of advances to a senior secured convertible note due February 24, 2024.

As of September 30, 2022 and December 31, 2021, there was $0 and $628,550 of short-term advances due to related parties, respectively.

------

*Accounts Payable and Accrued Expenses - Related Parties*

As of September 30, 2022, there was $203,484 of accounts payable related parties which consisted of $203,484 due to Leaverite Exploration, Inc. d/b/a Leaverite Consulting ("Leaverite Exploration"), a corporation wholly-owned by our President, Jay Leaver pursuant to a consulting agreement.

As of December 31, 2021, there was $228,668 of accounts payable related parties which consisted of $203,484 due to Leaverite Exploration, $4,394 due to former CFO John Lepin, $10,000 due Kelloff Oil &Gas, LLC, a limited liability company and $5,790 due to Staley Engineering LLC for consulting services.

*Notes Payable - Related Party*

On December 3, 2020, the Company executed a promissory note for $65,000 with Jay Leaver, our President. The unsecured note matured three years from date of issuance and bore interest at a rate of 5% per annum. As of December 31, 2021, the note payable had unpaid accrued interest in the amount of $13,003. On February 23, 2022, the promissory note was amended to a principal amount of $406,750, which includes the original $65,000 plus additional advances of $325,580, and accrued interest of $16,170. An additional $110,235 was advanced during the nine months ended September 30, 2022 maturing February 23, 2025. In February 2022, Mr. Leaver advanced an additional $500,000 to the Company. On February 25, 2022, Mr. Leaver's $406,750 promissory note and $500,000 advance were assigned to 20 Shekels, Inc, a corporation wholly-owned by Marshwiggle, LLC, a limited liability company jointly owned by Mr. Leaver and his spouse and on February 25, 2022 the Company issued $906,750 of its secured senior secured convertible notes due February 24, 2024, bearing interest at a rate of 7.25% per annum (the "7.25% Note") in exchange for the prior obligations. The 7.25% Note is convertible into shares of the Company's Common Stock at $5.00 per share. See Note 7 – Senior Secured Convertible Notes Payable.

**NOTE 5** – **COMMON STOCK**

The Company is authorized to issue 75,000,000 shares of its capital stock, consisting of 10,000,000 shares of preferred stock, par value $0.001 per share, and 65,000,000 shares of common stock, par value $0.001 per share.

The Company compensates each of its directors with 4,000 shares of common stock each month. During the nine months ended September 30, 2022, the Company recorded stock compensation of $120,000 and issued 108,000 shares of common stock to directors.

During the nine months ended September 30, 2022, the Company recorded stock compensation in the amount of $78,720 and issued 78,720 shares of common stock to Kelloff Oil & Gas, LLC. In addition, the Company recorded stock compensation in the amount of $29,000 issued 37,000 shares of common stock for services provided during the nine months ended September 30, 2022.

On September 2, 2022, the Company entered into a six-month agreement with a consultant that includes the issuance of 60,000 common shares. During the nine months ended September 30, 2022, the Company issued 60,000 common shares and recorded $10,000 of expense. As of September 30, 2022, there was $50,000 of unrecognized expense related to this agreement. The Company will recognize the remaining expense over the service period.

During the nine months ended September 30, 2022, the Company issued 2,504,500 shares of common stock and received cash proceeds of $2,504,500.

**NOTE 6** – **CONVERTIBLE CREDIT LINE PAYABLE AND SENIOR SECURED CONVERTIBLE NOTES PAYABLE** – **RELATED PARTY**

*Convertible Credit Line Payable*

On June 1, 2021, the Company entered into a new convertible credit line agreement to borrow up to $1,500,000 and matures on June 1, 2023. The outstanding balance accrues interest at a rate of 7% per annum and the outstanding balance is convertible to common stock of the Company at the lesser of the close price of the common stock as quoted on the OTCBB on the day interest is due and payable immediately preceding the conversion or $4.00. The Company analyzed the conversion option in the convertible line of credit for derivative accounting consideration under ASC 815, Derivative and Hedging, and determined that the transaction does qualify for derivative treatment. The Company evaluated the new convertible credit line for debt modification in accordance with ASC 470-50 and concluded that the debt qualified for debt modification as the borrowing capacity under the new credit line is greater than the borrowing capacity under the original credit line. There were no fees paid to the creditor and no unamortized deferred costs on the original credit line. Accordingly, no expense was recognized in connection with the transaction. On August 8, 2021, the Company received $20,000 in cash proceeds from the credit line. During the nine months ended September 30, 2022, the Company amortized $5,395 of the discount as interest expense. As of September 30, 2022, and December 31, 2021, the unamortized discount was $5,705 and $11,100, respectively. During the nine months ended September 30, 2022, the Company repaid $30,000 of principal on the convertible credit line. The outstanding principal balance on the convertible credit line as of September 30, 2022 and December 31, 2021 amounted to $138,328 and $168,328, respectively . See discussion of derivative liability in Note 8 – Derivative Liability.

------

*Senior Secured Convertible Notes Payable*

On February 25, 2022, the Company entered into secured senior secured convertible note for the purchase and sale of convertible promissory notes ("Convertible Note") in the principal amount of $5,000,000. The Senior Convertible Note is convertible at any time after the date of issuance into shares of the Company's common stock at a fixed conversion price of $5.00 per share. Upon conversion of the convertible note into the Company's common stock, the noteholder would be issued 1,000,000 shares of the Company's common stock. Interest on the Convertible Note shall be paid to the investors at a rate of 7.25% per annum, paid on a quarterly basis, and the maturity date of the Convertible Note is two years after the issuance date. The Convertible Note purports to be secured by certain oil and gas leases, lands, minerals and other properties of the Company, subject to prior liens and security interests. See Note 4 – Related Party Transactions. $413,206 from a related party were exchanged for a Convertible Note. Due to the variable conversion price in the convertible credit line, this fixed senior secured convertible note is treated as derivatives due to possibility of insufficient shares available at conversion to settle the notes. The day one derivative liability was $65,262, which was recorded as a discount on the senior secured convertible notes payable. During the nine months ended September 30, 2022, the Company amortized $19,401 of the discount as interest expense. As of September 30, 2022, the unamortized discount was $45,862. The outstanding principal balance on the convertible credit line as of September 30, 2022 amounted to $413,206. See discussion of derivative liability in Note 8 – Derivative Liability.

On February 25, 2022, Mr. Leaver assigned a $406,750 promissory note and advances of $500,000 to 20 Shekels, an affiliated Company. On the same day, the assigned promissory note and advance totaling $906,750 were transferred into a secured senior secured convertible note. The convertible note bears interest at 7.25% and matures on February 25, 2024. The note is convertible into shares of the Company at $5.00 per share. Due to the variable convertible credit line, this fixed senior secured convertible note are treated as derivatives due to possibility of insufficient shares available at conversion to settle the notes. The day one derivative liability was $143,214, which was recorded as a discount on the senior secured convertible notes payable. During the nine months ended September 30, 2022, the Company amortized $42,572 of the discount as interest expense. As of September 30, 2022, the unamortized discount was $100,642. The outstanding principal balance on the convertible credit line as of September 30, 2022 amounted to $906,754. See discussion of derivative liability in Note 8 – Derivative Liability.

As of September 30, 2022, the senior secured convertible notes payable balance, net of discount was $1,173,456 with accrued interest of $8,878.

**NOTE 7** – **DERIVATIVE LIABILITY**

As discussed in Note 1, we measure certain financial assets and liabilities based upon the fair value hierarchy. The following table presents information about the Company's financial liabilities, measured at fair value on a recurring basis, as of September 30, 2022 and December 31, 2021:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | | | | Fair Value at |
|  | | | | September 30, |
|  | Level 1 | Level 2 | Level 3 | 2022 |
| Liabilities: |  |  |  |  |
| Derivative liability | $- | $- | $275120 | $275120 |

---

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| | | | | |
|:---|:---|:---|:---|:---|
|  | | | | Fair Value at |
|  | | | | December 31, |
|  | Level 1 | Level 2 | Level 3 | 2021 |
| Liabilities: |  |  |  |  |
| Derivative liability | $- | $- | $145041 | $145041 |

---

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Utilizing Level 3 Inputs, the Company recorded a gain on fair market value adjustments related to convertible credit line payable and senior secured notes payable for the nine months ended September 30, 2022 of $78,397. The fair market value adjustments as of September 30, 2022 were calculated utilizing the Black-Scholes option pricing model using the following assumptions: exercise price of $1.00 - $5.00, computed volatility of 180% - 261% and discount rate of 3.92% - 4.05.

A summary of the activity of the derivative liability is shown below at September 30, 2022:

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| | |
|:---|:---|
| Balance at December 31, 2021 | $145041 |
| Debt discount on senior secured notes payable | 208476 |
| Gain on change in derivative fair value adjustment | (78397) |
| Balance at September 30, 2022 | $275120 |

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**NOTE 8** – **SUBSEQUENT EVENTS**

Subsequent to September 30, 2022, the Company paid $138,328 in principal and $52,038 of accrued interest on the convertible credit line. As of November 18, 2022, the convertible credit line was paid in full.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Shares of Common Stock**

![lglogo.jpg](lglogo.jpg)

**Alpha Energy, Inc.**

**__________________________________**

**PROSPECTUS**

**__________________________________**

**ThinkEquity**

**_______, 2023**

Through and including **_____**, 2023 (the 25<sup>th</sup> day after the date of this offering), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

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**PART II**

**INFORMATION NOT REQUIRED IN PROSPECTUS**

**Item 13. Other Expenses of Issuance and Distribution.**

The following table sets forth all expenses to be paid by the registrant, other than estimated underwriting discounts and commissions, in connection with our initial public offering. All amounts shown are estimates except for the SEC registration fee, NYSE American listing fee and the FINRA filing fee:

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| | |
|:---|:---|
| SEC registration fee | $3327 |
| NYSE American listing fee | $15000.0 |
| FINRA filing fee | $— |
| Printing expenses\* | $15000.0 |
| Legal fees and expenses\* | $150000.0 |
| Accounting fees and expenses\* | $15000.0 |
| &nbsp;&nbsp;&nbsp; Miscellaneous\* | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $— |

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____________

\* Estimated

**Item 14. Indemnification of Directors and Officers.**

Section 145 of the Colorado General Corporation Law provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent to the registrant. The Colorado General Corporation Law provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. The registrant's bylaws provide for indemnification by the registrant of its directors, officers and employees to the fullest extent permitted by the Colorado General Corporation Law.

Section 102(b)(7) of the Colorado General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions, or (iv) for any transaction from which the director derived an improper personal benefit. The registrant's certificate of incorporation provides for such limitation of liability.

The registrant maintains standard policies of insurance under which coverage is provided (a) to its directors and officers against loss arising from claims made by reason of breach of duty or other wrongful act, and (b) to the registrant with respect to payments which may be made by the registrant to such officers and directors pursuant to the above indemnification provision or otherwise as a matter of law.

The proposed form of Underwriting Agreement, filed as Exhibit 1.1 to this registration statement, provides for indemnification of directors and officers of the registrant by the underwriters against certain liabilities.

The registrant expects to enter into customary indemnification agreements with its executive officers and directors that provide them, in general, with customary indemnification in connection with their service to the registrant or on the registrant's behalf.

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Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to the directors, officers, and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities (other than the payment by the small business issuer of expenses incurred or paid by a directors, officers or controlling person of the small business issuer in the successful defense of any action, suit or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

**Item 15. Recent Sales of Unregistered Securities.**

On June 20, 2020, the Company sold an aggregate of 50,000 shares of common stock at a purchase price of $1.00 per share.

On October 15, 2020, the Company sold an aggregate of 5,000 shares of common stock at a purchase price of $1.00 per share.

On June 18, 2020, the Company sold an aggregate of 5,000 shares of common stock at a purchase price of $1.00 per share.

On February 22, 2022, the Company sold an aggregate of 10,000 shares of common stock at a purchase price of $1.00 per share.

On February 23, 2022, the Company sold an aggregate of 7,000 shares of common stock at a purchase price of $1.00 per share.

On February 24, 2022, the Company sold an aggregate of 24,000 shares of common stock at a purchase price of $1.00 per share.

On February 27, 2022, the Company sold an aggregate of 20,000 shares of common stock at a purchase price of $1.00 per share.

On February 28, 2022, the Company sold an aggregate of 14,000 shares of common stock at a purchase price of $1.00 per share.

On March 1, 2022, the Company sold an aggregate of 13,000 shares of common stock at a purchase price of $1.00 per share.

On March 2, 2022, the Company sold an aggregate of 15,500 shares of common stock at a purchase price of $1.00 per share.

On March 3, 2022, the Company sold an aggregate of 13,000 shares of common stock at a purchase price of $1.00 per share.

On March 4, 2022, the Company sold an aggregate of 20,000 shares of common stock at a purchase price of $1.00 per share.

On March 5, 2022, the Company sold an aggregate of 10,000 shares of common stock at a purchase price of $1.00 per share.

On March 7, 2022, the Company sold an aggregate of 312,000 shares of common stock at a purchase price of $1.00 per share.

On March 8, 2022, the Company sold an aggregate of 71,000 shares of common stock at a purchase price of $1.00 per share.

------

On March 9, 2022, the Company sold an aggregate of 20,000 shares of common stock at a purchase price of $1.00 per share.

On March 10, 2022, the Company sold an aggregate of 370,000 shares of common stock at a purchase price of $1.00 per share.

On March 11, 2022, the Company sold an aggregate of 165,000 shares of common stock at a purchase price of $1.00 per share.

On March 14, 2022, the Company sold an aggregate of 269,000 shares of common stock at a purchase price of $1.00 per share.

On March 17, 2022, the Company sold an aggregate of 5,000 shares of common stock at a purchase price of $1.00 per share.

On March 18, 2022, the Company sold an aggregate of 7,000 shares of common stock at a purchase price of $1.00 per share.

On May 10, 2022, the Company sold an aggregate of 3,000 shares of common stock at a purchase price of $1.00 per share.

On May 12, 2022, the Company sold an aggregate of 30,000 shares of common stock at a purchase price of $1.00 per share.

On May 13, 2022, the Company sold an aggregate of 100,000 shares of common stock at a purchase price of $1.00 per share.

On May 26, 2022, the Company sold an aggregate of 50,000 shares of common stock at a purchase price of $1.00 per share.

On May 27, 2022, the Company sold an aggregate of 100,000 shares of common stock at a purchase price of $1.00 per share.

On July 20, 2022, the Company sold an aggregate of 4,000 shares of common stock at a purchase price of $1.00 per share.

On August 30, 2022, the Company sold an aggregate of 350,000 shares of common stock at a purchase price of $1.00 per share.

On August 31, 2022, the Company sold an aggregate of 405,000 shares of common stock at a purchase price of $1.00 per share.

Each of the forgoing sales was made pursuant to a $1.00 per share Subscription Agreement by and between the Company and investor.

The securities referenced in this Item 15 were issued in reliance upon the exemption from registration afforded by Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering. Each of the foregoing sales was made to an "accredited investor" as such term is defined in Rule 501 of Regulation D promulgated by the Commission under the Securities Act.

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**Item 16. Exhibits and Financial Statement Schedules.**

The following exhibits are filed as part of this Registration Statement.

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| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 1.1\*\* | Form of Underwriting Agreement. |
| 3.1 \*\* | Articles of Incorporation of the Company dated September 26, 2013 (incorporated by reference to Exhibit 3.1 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on April 4, 2022). |
| 3.2 \*\* | Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on April 4, 2022). |
| 5.1\*\* | Opinion of Law Office of Harvey Kesner, Esq. |
| 5.2\*\* | Opinion of |
| 10.1 \*\* | [Exchange Agreement, dated December 31, 2022, by and between Alpha Energy, Inc and 20 Shekels, Inc.](ex_473545.htm) |
| 10.2 \* | Exchange Agreement, dated December 31, 2022, by and between Alpha Energy, Inc. and AEI Management Inc. (incorporated by reference to Exhibit 10.1 hereof). |
| 10.3 \* | [Note Purchase Agreement, dated December 31, 2022, by and between Alpha Energy, Inc. and 20 Shekels, Inc.](ex_473546.htm) |
| 10.4 \* | [Note Purchase Agreement, dated December 31, 2022, by and between Alpha Energy, Inc. and AEI Management, Inc.](ex_473547.htm) |
| 10.5 \* | [7.25% Senior Secured Convertible Note due December 31, 2024, dated December 31, 2022, issued by Alpha Energy, Inc. to 20 Shekels Inc., in the amount of $906,754.](ex_473548.htm) |
| 10.6 \* | [7.25% Senior Secured Convertible Note due December 31, 2024, dated December 31, 2022, issued by Alpha Energy, Inc. to AEI Management, Inc., in the amount of $403,216](ex_473549.htm) |
| 10.7 \* | [Security Agreement, dated December 31, 2022, made by Alpha Energy, Inc. in favor of 20 Shekels, Inc.](ex_473550.htm) |
| 10.8 \* | Security Agreement, dated December 31, 2022, made by Alpha Energy, Inc. in favor of AEI Management, Inc. (incorporated by reference to Exhibit 10.8 hereof). |
| 10.9 \*\* | Purchase and Sale Agreement between the Company and Progressive Well Service, LLC, dated February 17, 2022 (incorporated by reference to Exhibit 10.1 to Registrant's Annual Report on Form 10-K, filed with the SEC on April 4, 2022). |
| 10.10 \* | [Form of $1.00 per share Subscription Agreement.](ex_473551.htm) |
| 10.11 \* | [Consulting Agreement by and between Fidare Consulting Group, LLC and the Company effective September 2, 2022.](ex_473552.htm) |
| 10.12 \*\* | Consultant Engagement Agreement by and between the Company and Jay Leaver, an individual, acting in his capacity as a representative of Leaverite Exploration, Inc., dated June 1, 2020 (incorporated by reference to Exhibit 10.13 to Registrant's Annual Report on Form 10-K, filed with the SEC on April 4, 2022). |
| 10.13 \* | [Consulting Agreement by and between Matador Wellsite Consulting, LLC and the Company dated October 15, 2022.](ex_473553.htm) |
| 10.14 \* | [Gathering and Processing Agreement Between Alpha Energy, Inc. and ETC Texas Pipeline, LTD, dated August 1, 2022 (as amended by Aid In Processing Agreement dated as of November 1, 2022 included herewith).](ex_473978.htm) |
| 10.15 \* | [Crude Oil Purchasing Agreement between Alpha Energy, Inc. and Energy Transfer Crude Marketing LLC, dated June 7, 2022.](ex_473554.htm) |
| 10.16 \*\* | Revolving Credit Note, in the amount of $500,000, dated June 1, 2021, issued by Alpha Energy, Inc. to AEI Acquisition Company, LLC (incorporated by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q, filed with the SEC on November 1, 2022). |
| 10.17 \*\* | Employment Agreement by and between the Alpha Energy, Inc. and John Lepin, dated June 1, 2020 LLC (incorporated by reference to Exhibit 10.18 to Registrant's Current Report on Form 8-K, filed with the SEC on October 29, 2018). |
| 10.18 \*\* | Board of Directors Agreement between Alpha Energy, Inc. and Richard M. Nummi (incorporated by reference to Exhibit 10.9 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on April 4, 2022). |
| 10.19 \*\* | Board of Directors Agreement between Alpha Energy, Inc. and Robert J. Flynn (incorporated by reference to Exhibit 10.10 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on April 4, 2022). |
| 10.20 \*\* | Board of Directors Agreement between Alpha Energy, Inc. and Lacie Kellogg (incorporated by reference to Exhibit 10.11 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on April 4, 2022). |
| 10.22\* | [Assignment of LLC Membership Interest Alpha Energy Texas Operating, LLC.](ex_473979.htm) |
| 10.23\*\* | 2022 Equity Incentive Plan (incorporated by reference to Exhibit A to the Company's Information Statement on Schedule 14C filed with the SEC on November 21, 2022). |
| 99.1\* | [Code of Ethics and Business Conduct.](ex_473887.htm) |
| 99.2\* | [Audit Committee Charter.](ex_473888.htm) |
| 99.3\* | [Compensation and Management Development Committee Charter.](ex_473889.htm) |
| 99.4\* | [Nomination and Governance Committee Charter.](ex_473890.htm) |
| 21.1\* | [List of Subsidiaries.](ex_474612.htm) |
| 23.1\* | [Consent of Independent Registered Public Accounting Firm.](ex_474670.htm) |

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------

---

| | |
|:---|:---|
| 23.2\* | [Consent of MaloneBailey, LLP.](ex_475586.htm) |
| 23.3\*\* | Consent of Law Offices of Harvey Kesner (included in Exhibit 5.1). |
| 23.4\*\* | Consent of (included in Exhibit 5.2). |
| 24.1\* | [Power of Attorney (see signature page).](#poa) |
| 107\* | [Filing Fee Table.](ex_473891.htm) |
| EX-101.INS | Inline XBRL Instance Document \*\* |
| EX-101.SCH | Inline XBRLTaxonomy Extension Schema Document \*\* |
| EX-101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase \*\* |
| EX-101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase \*\* |
| EX-101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase \*\* |
| EX-101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase \*\* |

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\* Filed herein**.**

\*\* To be filed by amendment

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**Item 17. Undertakings.**

The undersigned registrant hereby undertakes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) To remove from registration by means of a post-effective amendment any of the securities being registered that remain unsold at the termination of the offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) That, for the purpose of determining liability of the undersigned registrant under the Securities Act to any purchaser in the initial distribution of the securities:

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The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (§ 230.424 of this chapter);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

For the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A (§ 230.430A of this chapter), shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

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**SIGNATURES**

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, on _________, 2023.

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| | | |
|:---|:---|:---|
| **ALPHA ENERGY, INC.** | **ALPHA ENERGY, INC.** | **ALPHA ENERGY, INC.** |
| By: | /s/ Jay Leaver | /s/ Jay Leaver |
|  | Name: | Jay Leaver |
|  | Title: | President |

---

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

---

| | |
|:---|:---|
| /s/ Robert J. Flynn | Dated: ____________  |
| Name: Robert J. Flynn<br> Title: Chairman of the Board of Directors  |  |
| /s/ Richard M. Nummi | Dated: ____________  |
| Name: Richard M. Nummi  |  |
| Title: Director |  |
| /s/ Lacie Kellogg | Dated: ____________  |
| Name: Lacie Kellogg |  |
| Title: Director and Chief Financial Officer |  |
| /s/ Mark Timm | Dated: ____________  |
| Name: Mark Timm |  |
| Title: Director  |  |

---

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**POWER OF ATTORNEY**

KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and directors of Alpha. Energy, Inc., a Colorado corporation that is filing a registration statement on Form S-1 with the Securities and Exchange Commission under the provisions of the Securities Act of 1933, as amended, hereby constitute and appoint Jay Leaver and Lacie Kellogg their true and lawful attorneys-in-fact and agent, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments to the registration statement, including a prospectus or an amended prospectus therein, and all other documents in connection therewith to be filed with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all interests and purposes as they might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or either of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. This Power of Attorney may be signed in several counterparts.

IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney. In accordance with the requirements of the Securities Act of 1933, as amended, this registration statement was signed by the following persons in the capacities and on the dates stated:

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| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| /s/ Jay Leaver | President (Principal Executive Officer) |  |
| Jay Leaver |  |  |
| /s/ Lacie Kellogg | Chief Financial Officer (Principal Financial and Accounting Officer) |  |
| Lacie Kellogg |  |  |
| /s/ Robert J. Flynn | Director |  |
| Robert J. Flynn |  |  |
| /s/ Richard M. Nummi | Director |  |
| Richard M. Nummi |  |  |

---

## Exhibit 10.1

**Exhibit 10.1**

**EXCHANGE AGREEMENT**

THIS EXCHANGE AGREEMENT (the "Agreement"), dated as of December 31. 2022, is made by and between Alpha Energy, Inc., a Colorado corporation (the "Company"), and the holder (the "Holder") of the Company's 7.25% Senior Secured Convertible Notes due February 24, 2024 (the "Old Notes").

WHEREAS, pursuant to that certain Contractual Investment Agreement (the "Purchase Agreement"), dated as of February 25, 2022, by and between the Company and the Holder for the Purchase of the Old Notes and transaction documents associated therewith (collectively, the "Released Agreements"), Holder purchased the Old Notes from the Company in the form attached to the Purchase Agreement which Notes are convertible into shares of Company Common Stock, par value $0.001 per share (the "Common Stock") in accordance with the terms thereof;

WHEREAS, the Holder holds the amount of Old Notes as set forth on <u>Schedule A</u> hereto, and the Company is current in all payments and obligations under the Old Notes through the date hereof;

WHEREAS, the Company has authorized a new Note Purchase Agreement ("NPA"), an amended 7.25% Convertible Secured Note (the "New Note"), and Security Agreement the "Security Agreement" and together with the New Note and the Security Agreement, the "New 7.25% Agreements") in the form attached hereto as <u>Exhibit A</u> which New Note shall be convertible into the Company's Common Stock, in accordance with the terms of the New Note;

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended (the "Securities Act"), the Company desires to exchange with the Holder, and the Holder desires to exchange with the Company, the Old Note for the New Note, which shall in all respects be governed pursuant to the New 7.25% Agreements, and release the Company from the Released Agreements.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and Holder agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Terms of the Exchange</u>. The Company and Holder agree that the Holder will exchange the Old Note and will relinquish any and all other rights he may have under the Released Agreements in exchange for such amount of New Note as governed by the New 7.25% Agreements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Closing</u>. Closing shall occur on the date hereof at the principal offices of the Company, or such other location as the parties shall mutually agree. At closing, Holder shall deliver the Old Note for the New Note as indicated on <u>Schedule A</u> annexed hereto. Upon closing, any and all obligations of the Company to Holder under the Released Agreements shall be fully satisfied, the Old Note shall be cancelled and Holder will have no remaining rights, powers, privileges, remedies or interests under the Old Note or the Released Agreements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Further Assurances</u>

Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Representations and Warranties of the Holder</u>. The Holder represents and warrants as of the date hereof and as of the closing to the Company as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. <u>Authorization; Enforcement</u>. The Holder has the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement by the Holder and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Holder and no further action is required by the Holder. This Agreement has been (or upon delivery will have been) duly executed by the Holder and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Holder enforceable against the Holder in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. <u>Tax Advisors</u>. The Holder has reviewed with its own tax advisors the U.S. federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. With respect to such matters, the Holder relies solely on such advisors and not on any statements or representations of the Company or any of its agents, written or oral. The Holder understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. <u>Information Regarding Holder</u>. Holder is an "accredited investor", as such term is defined in Rule 501 of Regulation D promulgated by the United States Securities and Exchange Commission (the "Commission") under the Securities Act, is experienced in investments and business matters, has made investments of a speculative nature and has purchased securities of companies in private placements in the past and, with its representatives, has such knowledge and experience in financial, tax and other business matters as to enable the Holder to utilize the information made available by the Company to evaluate the merits and risks of and to make an informed investment decision with respect to the proposed purchase, which represents a speculative investment. Holder has the authority and is duly and legally qualified to purchase and own the Securities. Holder is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. <u>Legend</u>. The Holder understands that the Note and Common Stock into which the Note is convertible (the "Securities") will pursuant to an exemption from registration or qualification under the Securities Act and applicable state securities laws, and except as set forth below, shall bear any legend as required by the "blue sky" laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. <u>Removal of Legends</u>. Certificates evidencing the Securities shall not be required to contain the legend set forth in Section 4(d) above or any other legend (i) while a registration statement covering the resale of such Securities is effective under the Securities Act, (ii) following any sale of such Securities pursuant to Rule 144 (assuming the transferor is not an affiliate of the Company), (iii) if such Securities are eligible to be sold, assigned or transferred under Rule 144 and the Subscriber is not an affiliate of the Company (provided that the Holder provides the Company with reasonable assurances that such Securities are eligible for sale, assignment or transfer under Rule 144 which shall not include an opinion of the Holder's counsel), (iv) in connection with a sale, assignment or other transfer (other than under Rule 144), provided that the Holder provides the Company with an opinion of counsel to the Holder, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the Securities Act or (v) if such legend is not required under applicable requirements of the Securities Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC). If a legend is not required pursuant to the foregoing, the Company shall no later than three (3) business days following the delivery by the Holder to the Company or the transfer agent (with notice to the Company) of a legended certificate representing such Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), together with any other deliveries from the Holder as may be required above in this Section 4(e), as directed by the Holder, either: (A) provided that the Company's transfer agent is participating in the DTC Fast Automated Securities Transfer Program and such Securities are Shares or Conversion Shares, credit the aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company's transfer agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to the Holder, a certificate representing such Securities that is free from all restrictive and other legends, registered in the name of the Holder or its designee. The Company shall be responsible for any transfer agent fees or DTC fees with respect to any issuance of Securities or the removal of any legends with respect to any Securities in accordance herewith, including, but not limited to, fees for the opinions of counsel rendered to the transfer agent in connection with the removal of any legends.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. <u>Restricted Securities</u>. The Holder understands that: (i) the Securities have not been and are not being registered under the Securities Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) the Holder shall have delivered to the Company (if requested by the Company) an opinion of counsel to the Holder, in a form reasonably acceptable to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) the Holder provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the Securities Act (or a successor rule thereto) (collectively, "Rule 144"); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC promulgated thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Representations and Warranties of the Company</u>. The Company hereby makes the following representations and warranties to the Holder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. <u>Authorization; Enforcement</u>. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other agreements entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively, the "Exchange Documents") and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors of the Company or the Company's stockholders in connection therewith, including, without limitation, the issuance of the Common Stock, and the reservation for issuance and issuance of Common Stock upon conversion of the Note have been duly authorized by the Company's Board of Directors and no further filing, consent, or authorization is required by the Company, its Board of Directors or its stockholders. This Agreement and any Other Agreement (as defined herein) have been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. <u>Organization and Qualification</u>. Each of the Company and its subsidiaries (the "Subsidiaries") are entities duly organized and validly existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authorization to own their properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each of the Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. As used in this Agreement, "Material Adverse Effect" means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any Subsidiary, individually or taken as a whole, (ii) the transactions contemplated hereby or in any of the other Exchange Documents or (iii) the authority or ability of the Company to perform any of its obligations under any of the New 7.25% Agreements. Other than its Subsidiaries, there is no Person (as defined below) in which the Company, directly or indirectly, owns capital stock or holds an equity or similar interest. "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any governmental entity or any department or agency thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. <u>No Conflict</u>. The execution, delivery and performance of the New 7.25% Agreements by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Securities and reservation for issuance and issuance of the Common Stock) will not (i) (i) result in a violation of the Certificate of Incorporation (as defined below) or other organizational documents of the Company or any of its Subsidiaries, any capital stock of the Company or any of its Subsidiaries or Bylaws (as defined below) of the Company or any of its Subsidiaries, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal and state securities laws and regulations and the rules and regulations of the OTC Markets (the "Principal Market") applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected except, in the case of clause (ii) or (iii) above, to the extent such violations that could not reasonably be expected to have a Material Adverse Effect.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. <u>No Consents</u>. Neither the Company nor any Subsidiary is required to obtain any consent from, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Exchange Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company or any Subsidiary is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date of this Agreement, and neither the Company nor any of its Subsidiaries is aware of any facts or circumstances which might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated by the Exchange Documents. The Company is not in violation of the requirements of the Principal Market and has no knowledge of any facts or circumstances which could reasonably lead to delisting or suspension of the Common Stock in the foreseeable future.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. <u>Securities Law Exemptions</u>. Assuming the accuracy of the representations and warranties of the Holder contained herein, the offer and issuance by the Company of the Securities is exempt from registration under the Securities Act. The offer and issuance of the Securities is exempt from registration under the Securities Act pursuant to the exemption provided by Section 3(a)(9) thereof. The Company covenants and represents to the Holder that neither the Company nor any of its Subsidiaries has received, anticipates receiving, has any agreement to receive or has been given any promise to receive any consideration from the Holder or any other Person in connection with the transactions contemplated by the New 7.25% Agreements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. <u>Issuance of Securities</u>. The issuance of the Securities are duly authorized and upon issuance in accordance with the terms of the New 7.25% Agreements. shall be validly issued, fully paid and non-assessable and free from all taxes, liens, charges and other encumbrances with respect to the issue thereof. Upon issuance or conversion in accordance with the Note, the Common Stock, when issued, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens, charges and other encumbrances with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. <u>Transfer Taxes</u>. As of the date of this Agreement, all share transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the issuance of the Securities to be exchanged with the Holder hereunder will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h. <u>Equity Capitalization</u>. Except as disclosed in the Company's SEC Documents (as defined below): (i) none of the Company's or any Subsidiary's capital stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company or any Subsidiary; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries; (iii) there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound; (iv) there are no financing statements securing obligations in any amounts filed in connection with the Company or any of its Subsidiaries; (v) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the Securities Act; (vi) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (vii) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; (viii) neither the Company nor any Subsidiary has any stock appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement; and (ix) neither the Company nor any of its Subsidiaries have any liabilities or obligations required to be disclosed in the in the Company's filings with the SEC (the "SEC Documents") which are not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company's or its Subsidiaries' respective businesses and which, individually or in the aggregate, do not or could not have a Material Adverse Effect. The Company has furnished to the Holder true, correct and complete copies of the Company's Certificate of Incorporation, as amended and as in effect on the date hereof (the "Certificate of Incorporation"), and the Company's bylaws, as amended and as in effect on the date hereof (the "Bylaws"), and the terms of all securities convertible into, or exercisable or exchangeable for, shares of Common Stock and the material rights of the holders thereof in respect thereto that have not been disclosed in the SEC Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) (i) <u>Shell Company Status</u>. The Company is not and has never been an issuer identified in Rule 144(i)(1) of the Securities Act. The Company is, and has been for a period of at least 90 days, subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Additional Acknowledgments</u>. The Holder and the Company confirm that the Company has not received any consideration for the transactions contemplated by this Agreement. Pursuant to Rule 144 promulgated by the Commission pursuant to the Securities Act and the rules and regulations promulgated thereunder as such Rule 144 may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule 144, the holding period of the Securities (including the Common Stock upon conversion of the Notes) tacks back to February 22, 2022, the issue date of the Old Notes. The Company agrees not to take a position contrary to this paragraph.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Release by the Holder; Termination of Released Agreements; Waiver of Registration Rights</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. In consideration of the foregoing, Holder releases and discharges Company, Company's officers, directors, principals, control persons, past and present employees, insurers, successors, and assigns ("Company Parties") from all actions, cause of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims, and demands whatsoever, in law, admiralty or equity, which against Company Parties ever had, now have or hereafter can, shall or may, have for, upon, or by reason of any matter, cause or thing whatsoever, whether or not known or unknown, arising under the Released Agreements. It being understood that this Section shall be limited in all respects to only matters arising under or related to the Released Agreements shall under no circumstances constitute a release, waiver or discharge with respect to the New Note or New 7.25% Agreement or limit the Holder from taking action for matters with respect to the New Note, the New 7.25% Agreements or events that may arise in the future.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. As further consideration of the foregoing, Holder and the Company hereby acknowledge and agree that the Purchase Agreement, and all rights, covenants, agreements and obligations contained therein, is hereby terminated and of no further force or effect. The Holder and the Company hereby agree and confirm that the Holder's agreement to terminate the Company's obligations under the Purchase Agreement shall constitute an agreement to terminate pursuant to Section 9 of the Purchase Agreement and, upon the Company independently obtaining similar agreements from such Other Holders as would constitute all of the Holders of the Old Notes, such termination shall be considered a termination of the Purchase Agreement with respect to all parties thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. As further consideration of the foregoing, Holder hereby waives, only on behalf of itself, any rights under any Registration Rights Agreement, by and between the Company and the Holder, as amended from time to time and any restriction on the Company's ability to grant additional registration rights to Holder or any other person or entity, providing the parties thereto with any notice relating to the filing of any additional registration statements by the Company and requiring that the Company include any Registrable Securities (as defined therein) in any future registration statement filed by the Company. The Holder and the Company hereby agree and confirm that the Holder's agreement to waive the Company's obligations under any Registration Rights Agreement shall constitute a waiver pursuant to Section 9 of the Purchase Agreement and, upon the Company independently obtaining similar waivers from such Other Holders as would constitute all the Holders" (as defined in the Registration Rights Agreement), such waiver shall be considered a waiver of the Company's obligations under any Registration Rights Agreement with respect to all parties thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Miscellaneous.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. <u>Successors and Assigns</u>. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. <u>Governing Law; Jurisdiction; Waiver of Jury Trial</u>. This Agreement shall be governed by and construed under the laws of the State of New York without regard to the choice of law principles thereof. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of New York located in The City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or therewith or with any transaction contemplated hereby or thereby, and hereby irrevocably waives any objection that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. <u>Severability</u>. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. <u>Counterparts/Execution</u>. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains an electronic file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or electronic file signature page (as the case may be) were an original thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. <u>Notices</u>. Any notice or communication permitted or required hereunder shall be in writing and shall be deemed sufficiently given if hand-delivered or sent (i) postage prepaid by registered mail, return receipt requested, or (ii) by facsimile, to the respective parties as set forth below, or to such other address as either party may notify the other in writing.

If to the Company, to:

If to the Company:

Alpha Energy, Inc.<br> 14143 Denver West Parkway, Suite 100,

Golden, CO 80401

800-819-0604<br> Jay Leaver, Pres.

Jleaver@alpha-energy.us

With a copy to:

Law Office of Harvey Kesner

500 Fifth Avenue

Suite #938

New York, NY 10036

646-678-2543

Harvey@hkesnerlaw.com

If to Holder, to the address set forth on the signature page of the Holder

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. <u>Expenses</u>. The parties hereto shall pay their own costs and expenses in connection herewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. <u>Entire Agreement; Amendments</u>. This Agreement constitutes the entire agreement between the parties with regard to the subject matter hereof and thereof, superseding all prior agreements or understandings, whether written or oral, between or among the parties. This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions hereof may be waived, only by a written instrument signed by all parties, or, in the case of a waiver, by the party waiving compliance. Except as expressly stated herein, no delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege hereunder preclude any other or future exercise of any other right, power or privilege hereunder.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h. <u>Headings</u>. The headings used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. <u>Independent Nature of the Holder'</u><u>s Obligations and Rights</u>. The obligations of the Holder under the New 7.25% Agreements are several and not joint with the obligations of any other holder of New Notes Warrants (each, an "Other Holder") under any other agreement to exchange Old Notes for New Notes (each, an "Other Agreement"), and the Holder shall not be responsible in any way for the performance of the obligations of any Other Holders under any Other Agreement. Nothing contained herein or in any Other Agreement, and no action taken by the Holder pursuant hereto or any Other Holder pursuant to any Other Agreement, shall be deemed to constitute the Holder or any Other Holder as, and the Company acknowledges that the Holder and the Other Holders do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Holder and any Other Holder are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated by the Exchange Documents, any other agreement or any matters, and the Company acknowledges that the Holder and the Other Holders are not acting in concert or as a group or entity, and the Company shall not assert any such claim, with respect to such obligations or the transactions contemplated by the Exchange Documents and any Other Agreement. The decision of the Holder to acquire the Securities pursuant to the Exchange Documents has been made by the Holder independently of any Other Holder. The Holder acknowledges that no Other Holder has acted as agent for the Holder in connection with the Holder making its acquisition hereunder and that no Other Holder will be acting as agent of the Holder in connection with monitoring the Holder's Securities or enforcing its rights under the Exchange Documents. The Company and the Holder confirm that the Holder has independently participated with the Company in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. The Holder shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any of the Other Agreements, and it shall not be necessary for any Other Holder to be joined as an additional party in any proceeding for such purpose. To the extent that any of the Other Holders and the Company enter into the same or similar documents, all such matters are solely in the control of the Company, not the action or decision of the Holder, and would be solely for the convenience of the Company and not because it was required or requested to do so by the Holder or any Other Holder. For clarification purposes only and without implication that the contrary would otherwise be true, the transactions contemplated by the Exchange Documents include only the transaction between the Company and the Holder and do not include any other transaction between the Company and any Other Holder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j. <u>Most Favored Nation</u>. The Company hereby represents and warrants as of the date hereof and covenants and agrees from and after the date hereof that none of the terms offered to any Other Holder in any Other Agreement, is or will be more favorable to such Other Holder than those of the Holder and this Agreement. If, and whenever on or after the date hereof, the Company desires to enter into an Other Agreement, then (i) the Company shall provide prior written notice thereof to the Holder and (ii) upon execution by the Company and such Other Holder of such Other Agreement, the terms and conditions of this Agreement, the Other Agreement and the Securities (other than any limitations on conversion set forth therein) shall be, without any further action by the Holder or the Company, automatically amended and modified in an economically and legally equivalent manner such that the Holder shall receive the benefit of the more favorable terms and/or conditions (as the case may be) set forth in such Other Agreement, provided that upon written notice to the Company at any time the Holder may elect not to accept the benefit of any such amended or modified term or condition, in which event the term or condition contained in this Agreement or the Securities (as the case may be) shall apply to the Holder as it was in effect immediately prior to such amendment or modification as if such amendment or modification never occurred with respect to the Holder.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;k. <u>Reporting Status</u>. Until the date on which none of the Securities are outstanding, the Company shall timely file all reports required to be filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Company shall continue to timely file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would otherwise no longer require or permit such filings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;l. <u>Listing</u>. The Company shall use reasonable best efforts to promptly secure the listing or designation for quotation (as the case may be) of all of the Common Stock into which the New Note is convertible upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed or designated for quotation (as the case may be) (subject to official notice of issuance) (but in no event later than the date of conversion of the Notes) and shall use reasonable best efforts to maintain such listing or designation for quotation (as the case may be) of all Common Stock from time to time issuable under the terms of this Agreement on such national securities exchange or automated quotation system. The Company shall maintain the Common Stock's listing or authorization for quotation (as the case may be) on the Principal Market, The New York Stock Exchange, the NYSE MKT, the AMEX, the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market (each, an "Eligible Market") after approval for listing on such market. Neither the Company nor any of its Subsidiaries shall take any action which could be reasonably expected to result in the delisting or suspension of the Common Stock on an Eligible Market. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 8(l).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;m. <u>Pledge of Securities</u>. The Company acknowledges and agrees that the Securities may be pledged by the Holder in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and if the Holder effects a pledge of Securities it shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any Other Agreement. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by the Holder.

(Signature Pages Follow)

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the day and year first above written.

ALPHA ENERGY, INC.

By:____________________________________

Name: Jay Leaver

Title: President

**HOLDER: 20 SHEKELS, INC.**

By:____________________________________

Name: Jay Leaver

Title: President

Address for Notices:

__________________________________________

__________________________________________

__________________________________________

__________________________________________

Address for delivery of Securities:

__________________________________________

__________________________________________

__________________________________________

__________________________________________

------

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the day and year first above written.

ALPHA ENERGY, INC.

By:____________________________________

Name: Jay Leaver

Title: President

**HOLDER: AEI MANGEMENT, INC.**

By:____________________________________

Name: Harry McMillan

Title: President

Address for Notices:

__________________________________________

__________________________________________

__________________________________________

__________________________________________

Address for delivery of Securities:

__________________________________________

__________________________________________

__________________________________________

__________________________________________

------

**SCHEDULE A**

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| | |
|:---|:---|
| **Name of Holder** | **7.25% Old** <br> **Note Amount** <br> **Outstanding** |
| 20 Shekels, Inc. | $906754 |
| AEI Management, Inc. | $413206 |

---

## Exhibit 10.3

**Exhibit 10.3**

**NOTE PURCHASE AGREEMENT**

**NOTE PURCHASE AGREEMENT** (the "**Agreement**"), dated as of December 31, 2022, by and among Alpha Energy, Inc., a Colorado corporation, with headquarters located at 14143 Denver West Parkway, Suite 100, Golden, CO 80401 (the "**Company**"), and the investors listed on the Schedule of Buyers attached hereto (individually, a "**Buyer**" and collectively, the "**Buyers**").

**WHEREAS**:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. The Company and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the "**1933 Act**"), and Rule 506 of Regulation D ("**Regulation D**") as promulgated by the United States Securities and Exchange Commission (the "**SEC**") under the 1933 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The Company has authorized a new series of senior secured convertible notes of the Company which notes shall be convertible into the Company's common stock, par value $0.001 per share (the "**Common Stock**"), in accordance with the terms of the Notes (as defined below).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, that aggregate principal amount of the Notes, in substantially the form attached hereto as <u>Exhibit A</u> (the "**Notes**"), set forth opposite such Buyer's name in column (3) on the Schedule of Buyers attached hereto (which aggregate amount for all Buyers shall be $5,000,000) (as converted, collectively, the "**Conversion Shares**"),

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. Intentionally omitted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. The Notes and the Conversion Shares, collectively are referred to herein as the "**Securities**".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. The Notes will rank senior to all outstanding and future indebtedness of the Company and will be secured by a first priority perfected security interest in certain assets of the Company consisting of the proceeds and production of 34 well bores and related assets under that certain Purchase and Sale Agreement with Progressive Well Service, LLC. (the "Logan 1 Collateral". The Notes shall not be secured by individual liens or mortgages on any individual leases, well bores or other assets as evidenced by (i) a security agreement, in the form attached hereto as <u>Exhibit A</u> (as amended or modified from time to time in accordance with its terms, the "**Security Agreement**" or the "**Security Documents**").

**NOW, THEREFORE**, the Company and each Buyer hereby agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>PURCHASE AND SALE OF NOTES</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Purchase of Notes</u>. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company on the Closing Date (as defined below), (x) a principal amount of Notes as is set forth opposite such Buyer's name in column (3) on the Schedule of Buyers (the "**Closing**").

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Closing</u>. The date and time of the Closing (the "**Closing Date**") shall be 10:00 a.m., New York City time, on the date hereof (or such later date as is mutually agreed to by the Company and each Buyer) after notification of satisfaction (or waiver) of the conditions to the Closing set forth in Sections 6 and 7 below at the offices of Harvey Kesner, Esq. 500 Fifth Avenue, New York, NY 10036, or by electronic exchange of documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Purchase Price</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The aggregate purchase price for the Notes, to be purchased by each such Buyer at the Closing (the "**Purchase Price**") shall be the amount set forth opposite each Buyer's name in column (4) of the Schedule of Buyers. Each Buyer shall pay $1,000 for each $1,000 of principal amount of Notes to be purchased by such Buyer at the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Form of Payment</u>. On the Closing Date, (i) each Buyer shall pay its Purchase Price to the Company for the Notes, by wire transfer of immediately available funds in accordance with the Company's written wire instructions (or by delivery for cancellation and exchange an equivalent amount of outstanding indebtedness of the Company due and owing to Buyer, in exchange for the Notes) and (ii) the Company shall deliver to each Buyer the Notes (allocated in the principal amounts as such Buyer shall request) which such Buyer is purchasing, in each case duly executed on behalf of the Company and registered in the name of such Buyer or its designee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>BUYER'S REPRESENTATIONS AND WARRANTIES</u>. Each Buyer, severally and not jointly, represents and warrants with respect to only itself that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>No Public Sale or Distribution</u>. Such Buyer is (i) acquiring the Notes, the and (ii) upon conversion of the Notes will acquire the Conversion Shares issuable upon conversion of the Notes, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act; <u>provided</u>, <u>however</u>, that by making the representations herein, such Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act. Such Buyer is acquiring the Securities hereunder in the ordinary course of its business. Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Accredited Investor/Dealer Status</u>. Such Buyer is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D. Buyer is not required to register as a "dealer" under the Securities Exchange Act of 1934.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Reliance on Exemptions</u>. Such Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Buyer's compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the Securities.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Information</u>. Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by such Buyer. Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect such Buyer's right to rely on the Company's representations and warranties contained herein. Such Buyer understands that its investment in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>No Governmental Review</u>. Such Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Transfer or Resale</u>. Such Buyer understands that: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company an opinion of counsel, in a generally acceptable form, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended, (or a successor rule thereto) (collectively, "**Rule 144**"); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person (as defined in Section 3(s)) through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. The Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Securities and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Buyer effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document (as defined in Section 3(b)), including, without limitation, this Section 2(f).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Legends</u>. Such Buyer understands that the certificates or other instruments representing the Notes, until such time as the resale of the Conversion Shares, have been registered under the 1933 Act, the stock certificates representing the Conversion Shares, except as set forth below, shall bear any legend as required by the "blue sky" laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

**[**NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE **[**CONVERTIBLE**] [**EXERCISABLE**]** HAVE BEEN**][**THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN**]** REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Securities upon which it is stamped or issue to such holder by electronic delivery at the applicable balance account at DTC (as defined below), unless otherwise required by state securities laws, (i) such Securities are registered for resale under the 1933 Act, (ii) in connection with a sale, assignment or other transfer, such holder provides the Company with an opinion of counsel, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the 1933 Act, or (iii) such holder provides the Company with reasonable assurance that the Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Validity; Enforcement</u>. This Agreement, and the Security Documents to which such Buyer is a party have been duly and validly authorized, executed and delivered on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>No Conflicts</u>. The execution, delivery and performance by such Buyer of this Agreement, and the Security Documents to which such Buyer is a party and the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Buyer or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Residency</u>. Such Buyer is a resident of that jurisdiction specified below its address on the Schedule of Buyers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>REPRESENTATIONS AND WARRANTIES OF THE COMPANY</u>.

The Company represents and warrants to each of the Buyers that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Organization and Qualification</u>. Each of the Company and its "**Subsidiaries**" (which for purposes of this Agreement means any entity in which the Company, directly or indirectly, owns any of the capital stock or holds an equity or similar interest) are entities duly organized and validly existing in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authorization to own their properties and to carry on their business as now being conducted. Each of the Company and its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. As used in this Agreement, "**Material Adverse Effect**" means any material adverse effect on the business, properties, assets, operations, results of operations, condition (financial or otherwise) or prospects of the Company and its Subsidiaries, taken as a whole, or on the transactions contemplated hereby and the other Transaction Documents or by the agreements and instruments to be entered into in connection herewith or therewith, or on the authority or ability of the Company to perform its obligations under the Transaction Documents (as defined below). The Company has no Subsidiaries except as set forth on <u>Schedule 3(a)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Authorization; Enforcement; Validity</u>. The Company has the requisite power and authority to enter into and perform its obligations under this Agreement, the Notes, and the Security Documents, and each of the other agreements entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively, the "**Transaction Documents**") and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Notes, and the reservation for issuance and the issuance of the Conversion Shares issuable upon conversion of the Notes, and the granting of a security interest in the Collateral (as defined in the Security Documents) have been duly authorized by the Company's Board of Directors and (other than (i) the filing of appropriate UCC financing statements with the appropriate states and other authorities pursuant to the Security Agreement, and (ii) no further filing, consent, or authorization is required by the Company, its Board of Directors or its stockholders. This Agreement and the other Transaction Documents of even date herewith have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Issuance of Securities</u>. The issuance of the Notes, are duly authorized and are free from all taxes, liens and charges with respect to the issue thereof. As of the applicable Closing, a number of shares of Common Stock shall have been duly authorized and reserved for issuance which equals or exceeds 130% of the aggregate of the maximum number of shares of Common Stock issuable upon conversion of the Notes. Upon conversion or payment in accordance with the Notes, the Conversion Shares, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. The offer and issuance by the Company of the Securities is exempt from registration under the 1933 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>No Conflicts</u>. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Notes, the granting of a security interest in the Collateral and reservation for issuance and issuance of the Conversion Shares) will not (i) result in a violation of any certificate of incorporation, certificate of formation, any certificate of designations or other constituent documents of the Company or any of its Subsidiaries, any capital stock of the Company or any of its Subsidiaries or the bylaws of the Company or any of its Subsidiaries or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal and state securities laws and regulations and the rules and regulations of the OTC Pink Open Markets, or such other market on which the Company's common stock shall become approved for trading (the "**Principal Market**")) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Consents</u>. Neither the Company nor any of its Subsidiaries is required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the Closing Date, and the Company and its Subsidiaries are unaware of any facts or circumstances which might prevent the Company from obtaining or effecting any of the registration, application or filings pursuant to the preceding sentence. The Company is not in violation of the listing requirements of the Principal Market and has no knowledge of any facts which would reasonably lead to delisting or suspension of the Common Stock in the foreseeable future.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Acknowledgment Regarding Buyer's Purchase of Securities</u>. The Company acknowledges and agrees that each Buyer is acting solely in the capacity of arm's length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and that no Buyer is (i) an officer or director of the Company, (ii) an "affiliate" of the Company or any of its Subsidiaries (as defined in Rule 144) or (iii) to the knowledge of the Company, a "beneficial owner" of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the "**1934 Act**")), other than as set forth on <u>Schedule 3(f).</u> The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer's purchase of the Securities. The Company further represents to each Buyer that the Company's decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>No General Solicitation; Placement Agent's Fees</u>. Neither the Company, nor any of its Subsidiaries or affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. The Company shall be responsible for the payment of any placement agent's fees, financial advisory fees, or brokers' commissions (other than for persons engaged by any Buyer or its investment advisor) relating to or arising out of the transactions contemplated hereby. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, attorney's fees and out-of-pocket expenses) arising in connection with any such claim. The Company has not engaged any placement agent or other agent in connection with the sale of the Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>No Integrated Offering</u>. None of the Company, its Subsidiaries, any of their affiliates, and any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Securities under the 1933 Act or cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of the 1933 Act or any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated. None of the Company, its Subsidiaries, their affiliates and any Person acting on their behalf will take any action or steps referred to in the preceding sentence that would require registration of any of the Securities under the 1933 Act or cause the offering of the Securities to be integrated with other offerings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Dilutive Effect</u>. The Company understands and acknowledges that the number of Conversion Shares issuable upon conversion of the Notes will increase in certain circumstances. The Company further acknowledges that its obligation to issue Conversion Shares upon conversion of the Notes in accordance with this Agreement and the Notes is, in each case, is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Application of Takeover Protections; Rights Agreement</u>. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Articles of Incorporation or the laws of the jurisdiction of its formation which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the Company's issuance of the Securities and any Buyer's ownership of the Securities. The Company has not adopted a stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>SEC Documents; Financial Statements</u>. Except as disclosed in <u>Schedule 3(k)</u>, during the two (2) years prior to the date hereof, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the "**SEC Documents**"). The Company has delivered to the Buyers or their respective representatives true, correct and complete copies of the SEC Documents not available on the EDGAR system. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). No other information provided by or on behalf of the Company to the Buyers which is not included in the SEC Documents, including, without limitation, information referred to in Section 2(d) of this Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstance under which they are or were made, not misleading.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>Absence of Certain Changes</u>. Except as disclosed in <u>Schedule 3(l)</u>, since March 31, 2022, there has been no material adverse change and no material adverse development in the business, properties, operations, condition (financial or otherwise), results of operations or prospects of the Company or its Subsidiaries. Except as disclosed in <u>Schedule 3(l)</u>, since March 31, 2022, the Company has not (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, in excess of $100,000 outside of the ordinary course of business or (iii) had capital expenditures, individually or in the aggregate, in excess of $100,000 outside the ordinary course of business. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. The Company is not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes of this Section 3(l), "**Insolvent**" means, with respect to any Person (as defined in Section 3(s), (i) the present fair saleable value of such Person's assets is less than the amount required to pay such Person's total Indebtedness (as defined in Section 3(s)), (ii) such Person is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) the Company intends to incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature or (iv) such Person has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) <u>No Undisclosed Events, Liabilities, Developments or Circumstances</u>. No event, liability, development or circumstance has occurred or exists, or is contemplated to occur with respect to the Company, its Subsidiaries or their respective business, properties, prospects, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) <u>Conduct of Business; Regulatory Permits</u>. Neither the Company nor its Subsidiaries is in violation of any term of or in default under any certificate of designations of any outstanding series of preferred stock of the Company, its Articles of Incorporation or Bylaws or their organizational charter or certificate of incorporation or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except for possible violations which would not, individually or in the aggregate, have a Material Adverse Effect. Without limiting the generality of the foregoing, the Company is not in violation of any of the rules, regulations or requirements of the Principal Market and has no knowledge of any facts or circumstances which would reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future. During the two years prior to the date hereof, the Common Stock has been designated for quotation on the Principal Market. During the two years prior to the date hereof, (i) trading in the Common Stock has not been suspended by the SEC or the Principal Market and (ii) the Company has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting of the Common Stock from the Principal Market. The Company and its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) <u>Foreign Corrupt Practices</u>. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other Person acting on behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on behalf of, the Company or any of its Subsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) <u>Sarbanes-Oxley Act</u>. The Company is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) <u>Transactions With Affiliates</u>. Except as set on <u>Schedule 3(q)</u>, none of the officers, directors or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for ordinary course services as employees, officers or directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such officer, director or employee or, to the knowledge of the Company or any of its Subsidiaries, any corporation, partnership, trust or other entity in which any such officer, director, or employee has a substantial interest or is an officer, director, trustee or partner.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) <u>Equity Capitalization</u>. As of the date hereof, the authorized capital stock of the Company consists of (i) 65,000,000 shares of Common Stock, of which as of the date hereof, 21,501,206 are issued and outstanding, 2,824,000 shares are reserved for issuance pursuant to the Company's stock option and purchase plans and no shares are reserved for issuance pursuant to securities (other than the aforementioned options and the Notes) exercisable or exchangeable for, or convertible into, shares of Common Stock and (ii) 2,000,000 shares of preferred stock, par value $0.001 per share, of which as of the date hereof, none are issued and outstanding. All of such outstanding shares have been, or upon issuance will be, validly issued and are fully paid and nonassessable. Except as disclosed in <u>Schedule 3(r)</u>: (i) none of the Company's capital stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries; (iii) there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound; (iv) there are no financing statements securing obligations in any material amounts, either singly or in the aggregate, filed in connection with the Company or any of its Subsidiaries; (v) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act; (vi) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (vii) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; (viii) the Company does not have any stock appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement; and (ix) the Company and its Subsidiaries have no liabilities or obligations required to be disclosed in the SEC Documents but not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company's or its Subsidiaries' respective businesses and which, individually or in the aggregate, do not or would not have a Material Adverse Effect. The Company has furnished to the Buyers true, correct and complete copies of the Company's Articles of Incorporation, as amended and as in effect on the date hereof (the "**Articles of Incorporation**"), and the Company's Bylaws, as amended and as in effect on the date hereof (the "**Bylaws**"), and the terms of all securities convertible into, or exercisable or exchangeable for, shares of Common Stock and the material rights of the holders thereof in respect thereto.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) <u>Indebtedness and Other Contracts</u>. Except as disclosed in <u>Schedule 3(s)</u>, neither the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness (as defined below), (ii) is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument would result in a Material Adverse Effect, (iii) is in violation of any term of or in default under any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (iv) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company's officers, has or is expected to have a Material Adverse Effect. <u>Schedule 3(s)</u> provides a detailed description of the material terms of any such outstanding Indebtedness. For purposes of this Agreement: (x) "**Indebtedness**" of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services, including (without limitation) "capital leases" in accordance with generally accepted accounting principles (other than trade payables entered into in the ordinary course of business), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with generally accepted accounting principles, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; (y) "**Contingent Obligation**" means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto; and (z) "**Person**" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) <u>Absence of Litigation</u>. There is no action, suit, proceeding, inquiry or investigation before or by the Principal Market, any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company's Subsidiaries or any of the Company's or its Subsidiaries' officers or directors in their capacities as such except such that would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, except as set forth in <u>Schedule 3(t)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) <u>Intentionally omitted</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>Employee Relations</u>. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member of a union. The Company and its Subsidiaries believe that their relations with their employees are good. No executive officer of the Company or any of its Subsidiaries (as defined in Rule 501(f) of the 1933 Act) has notified the Company or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary or otherwise terminate such officer's employment with the Company or any such Subsidiary. No executive officer of the Company or any of its Subsidiaries, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) <u>Title</u>. The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and any of its Subsidiaries except where failure such liens, encumbrances and defects would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. Any real property and facilities held under lease by the Company and any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries except where such defects or exceptions would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) <u>Intellectual Property Rights</u>. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights ("**Intellectual Property Rights**") necessary to conduct their respective businesses as now conducted. Except as set forth in <u>Schedule 3(x)</u>, none of the Company's Intellectual Property Rights have expired or terminated, or are expected to expire or terminate, within three years from the date of this Agreement. The Company does not have any knowledge of any infringement by the Company or its Subsidiaries of Intellectual Property Rights of others. There is no claim, action or proceeding being made or brought, or to the knowledge of the Company or its Subsidiaries, being threatened, against the Company or its Subsidiaries regarding its Intellectual Property Rights. The Company is unaware of any facts or circumstances which might give rise to any of the foregoing infringements or claims, actions or proceedings. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) <u>Intentionally omitted.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) <u>Subsidiary Rights</u>. Except as set forth in <u>Schedule 3(z)</u>, the Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or such Subsidiary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa) <u>Investment Company Status</u>. The Company is not, and upon consummation of the sale of the Securities will not be, an "investment company," a company controlled by an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb) <u>Tax Status</u>. The Company and each of its Subsidiaries (i) has made or filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc) <u>Off Balance Sheet Arrangements</u>. There is no transaction, arrangement, or other relationship between the Company and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its Exchange Act filings and is not so disclosed or that otherwise would be reasonably likely to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd) <u>Ranking of Notes</u>. Except as set forth on <u>Schedule 3(dd)</u>, no Indebtedness of the Company is senior to or ranks *pari passu* with the Notes in right of payment, whether with respect of payment of redemptions, interest, damages or upon liquidation or dissolution or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee) <u>Eligibility for Registration</u>. The Company is eligible to register the Conversion Shares, for resale by the Buyers using Form S-1 promulgated under the 1933 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff) <u>Disclosure</u>. The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, nonpublic information. The Company understands and confirms that each of the Buyers will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to the Buyers regarding the Company, or any of its Subsidiaries, their business and the transactions contemplated hereby, including the Schedules to this Agreement, furnished by or on behalf of the Company is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Each press release issued by the Company or any of its Subsidiaries during the twelve (12) months preceding the date of this Agreement did not at the time of release contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>COVENANTS</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Best Efforts</u>. Each party shall use its best efforts timely to satisfy each of the conditions to be satisfied by it as provided in Sections 6 and 7 of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Form D and Blue Sky</u>. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to each Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Securities for sale to the Buyers at the Closing pursuant to this Agreement under applicable securities or "Blue Sky" laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyers on or prior to the Closing Date. The Company shall make all filings and reports relating to the offer and sale of the Securities required under applicable securities or "Blue Sky" laws of the states of the United States following the Closing Date.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Reporting Status</u>. Until the date on which the Investors shall have sold all the Conversion Shares and none of the Notes is outstanding (the "**Reporting Period**"), the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Use of Proceeds</u>. The Company will use the proceeds from the sale of the Securities for general corporate and for working capital purposes and not for (i) the repayment of any outstanding Indebtedness of the Company or any of its Subsidiaries, (ii) the redemption or repurchase of any of its or its Subsidiaries' equity securities or (iii) the settlement of any claims, actions or proceedings against the Company or any of its Subsidiaries, except as set forth on the schedules hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Financial Information</u>. The Company agrees to send the following to each Investor during the Reporting Period (i) unless the following are filed with the SEC through EDGAR and are available to the public through the EDGAR system, within one (1) Business Day after the filing thereof with the SEC, a copy of its Annual Reports and Quarterly Reports on Form 10-K, 10-KSB, 10-Q or 10-QSB, any interim reports or any consolidated balance sheets, income statements, stockholders' equity statements and/or cash flow statements for any period other than annual, any Current Reports on Form 8-K and any registration statements (other than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) on the same day as the release thereof, facsimile or e-mailed copies of all press releases issued by the Company or any of its Subsidiaries, and (iii) copies of any notices and other information made available or given to the stockholders of the Company generally, contemporaneously with the making available or giving thereof to the stockholders. As used herein, "**Business Day**" means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Listing</u>. The Company shall promptly secure the listing of all of the Conversion Securities and shall maintain such listing of all Conversion Securities from time to time issuable under the terms of the Transaction Documents. The Company shall maintain the Common Stocks' authorization for quotation on the Principal Market. Neither the Company nor any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(f).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Fees</u>. The Company shall reimburse Buyer or its designee(s) (in addition to any other expense amounts paid to any Buyer prior to the date of this Agreement) for all reasonable costs and expenses incurred in connection with the transactions contemplated by the Transaction Documents (including all reasonable legal fees and disbursements in connection therewith, documentation and implementation of the transactions contemplated by the Transaction Documents and due diligence in connection therewith), which amount shall be withheld by such Buyer from its Purchase Price at the Closing. The Company shall be responsible for the payment of any placement agent's fees, financial advisory fees, or broker's commissions (other than for Persons engaged by any Buyer) relating to or arising out of the transactions contemplated hereby, including, without limitation, any fees or commissions payable to the Placement Agent. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorney's fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Securities to the Buyers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Pledge of Securities</u>. The Company acknowledges and agrees that the Securities may be pledged by an Investor in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Investor effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation, Section 2(f) hereof; provided that an Investor and its pledgee shall be required to comply with the provisions of Section 2(f) hereof in order to effect a sale, transfer or assignment of Securities to such pledgee. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by an Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Disclosure of Transactions and Other Material Information</u>. On or before 8:30 a.m., New York City time, on the fourth (4<sup>th</sup>) Business Day following the date of this Agreement, the Company shall issue a press release and file a Current Report on Form 8-K describing the terms of the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and attaching the material Transaction Documents (including, without limitation, this Agreement, the form of the Notes, and the form of Security Documents as exhibits to such filing (including all attachments, the "**8**-**K Filing**"). From and after the filing of the 8-K Filing with the SEC, no Buyer shall be in possession of any material, nonpublic information received from the Company, any of its Subsidiaries or any of their respective officers, directors, employees or agents, that is not disclosed in the 8-K Filing. The Company shall not, and shall cause each of its Subsidiaries and its and each of their respective officers, directors, employees and agents, not to, provide any Buyer with any material, nonpublic information regarding the Company or any of its Subsidiaries from and after the filing of the 8-K Filing with the SEC without the express written consent of such Buyer. If a Buyer has, or believes it has, received any such material, nonpublic information regarding the Company or any of its Subsidiaries, it shall provide the Company with written notice thereof. The Company shall, within two (2) Trading Days (as defined in the Notes) of receipt of such notice, make public disclosure of such material, nonpublic information. In the event of a breach of the foregoing covenant by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees and agents, in addition to any other remedy provided herein or in the Transaction Documents, a Buyer shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such material, nonpublic information without the prior approval by the Company, its Subsidiaries, or any of its or their respective officers, directors, employees or agents. No Buyer shall have any liability to the Company, its Subsidiaries, or any of its or their respective officers, directors, employees, stockholders or agents for any such disclosure. Subject to the foregoing, neither the Company, its Subsidiaries nor any Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of any Buyer, to make any press release or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) each Buyer shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release). Without the prior written consent of any applicable Buyer, neither the Company nor any of its Subsidiaries or affiliates shall disclose the name of such Buyer in any filing, announcement, release or otherwise.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Restriction on Redemption and Cash Dividends</u>. So long as any Notes are outstanding, the Company shall not, directly or indirectly, redeem, or declare or pay any cash dividend or distribution on, the Common Stock without the prior express written consent of the holders of Notes representing not less than a majority of the aggregate principal amount of the then outstanding Notes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Additional Notes; Variable Securities; Dilutive Issuances</u>. For so long as any Notes remain outstanding, the Company shall not, in any manner, issue or sell any rights, warrants or options to subscribe for or purchase Common Stock or directly or indirectly convertible into or exchangeable or exercisable for Common Stock at a price which varies or may vary with the market price of the Common Stock, including by way of one or more reset(s) to any fixed price unless the conversion, exchange or exercise price of any such security cannot be less than the then applicable Conversion Price (as defined in the Notes) with respect to the Common Stock into which any Note is convertible with respect to the Common Stock into which any Warrant is exercisable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>Corporate Existence</u>. So long as any Buyer beneficially owns any Securities, the Company shall not be party to any Fundamental Transaction (as defined in the Notes) unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>Reservation of Shares</u>. So long as any Buyer owns any Securities, the Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than 100% of the sum of the number of shares of Common Stock issuable (i) upon conversion of the Notes then outstanding (without taking into account any limitations on the conversion of the Notes set forth in the Notes).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) <u>Conduct of Business</u>. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or regulation of any governmental entity, except where such violations would not result, either individually or in the aggregate, in a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) <u>Intentionally omitted.</u>

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) <u>Collateral Agent</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Each Buyer hereby (a) appoints AEI Management, Inc., as the collateral agent hereunder and under the other Security Documents (in such capacity, the "**Collateral Agent**"), and (b) authorizes the Collateral Agent (and its officers, directors, employees and agents) to take such action on such Buyer's behalf in accordance with the terms hereof and thereof. The Collateral Agent shall not have, by reason hereof or any of the other Security Documents, a fiduciary relationship in respect of any Buyer. Neither the Collateral Agent nor any of its officers, directors, employees and agents shall have any liability to any Buyer for any action taken or omitted to be taken in connection hereof or any other Security Document except to the extent caused by its own gross negligence or willful misconduct, and each Buyer agrees to defend, protect, indemnify and hold harmless the Collateral Agent and all of its officers, directors, employees and agents (collectively, the "**Indemnitees**") from and against any losses, damages, liabilities, obligations, penalties, actions, judgments, suits, fees, costs and expenses (including, without limitation, reasonable attorneys' fees, costs and expenses) incurred by such Indemnitee, whether direct, indirect or consequential, arising from or in connection with the performance by such Indemnitee of the duties and obligations of Collateral Agent pursuant hereto or any of the Security Documents. The Collateral Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the holders of at least a majority in principal amount of the Notes then outstanding, and such instructions shall be binding upon all holders of Notes; <u>provided</u>, <u>however</u>, that the Collateral Agent shall not be required to take any action which, in the reasonable opinion of the Agent, exposes the Agent to liability or which is contrary to this Agreement or any other Transaction Document or applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Collateral Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any telephone message believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person, and with respect to all matters pertaining to this Agreement or any of the other Transaction Documents and its duties hereunder or thereunder, upon advice of counsel selected by it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Collateral Agent may resign from the performance of all its functions and duties hereunder and under the Notes and the Security Documents at any time by giving at least ten (10) Business Days prior written notice to the Company and each holder of the Notes. Such resignation shall take effect upon the acceptance by a successor Collateral Agent of appointment as provided below. Upon any such notice of resignation, the holders of a majority of the outstanding principal under the Notes shall appoint a successor Collateral Agent. Upon the acceptance of the appointment as Collateral Agent, such successor Collateral Agent shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent, and the retiring Collateral Agent shall be discharged from its duties and obligations under this Agreement, the Notes and the other Security Documents. After any Collateral Agent's resignation hereunder , the provisions of this Section 4(n) shall inure to its benefit. If a successor Collateral Agent shall not have been so appointed within said ten (10) Business Day period, the retiring Collateral Agent shall then appoint a successor Collateral Agent who shall serve until such time, if any, as the holders of a majority of the outstanding principal under the Notes appoint a successor Collateral Agent as provided above.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) <u>Trading in Common Stock</u>. With respect to any Buyer, for so long as such Buyer owns any Notes, such Buyer shall not maintain a Net Short Position. For purposes of this Section, a "**Net Short Position**" by a Buyer means a position whereby such Buyer has executed one or more sales of Common Stock that is marked as a short sale and that is executed at a time when such Buyer has no equivalent offsetting long position in the Common Stock or contract for the foregoing. For purposes of determining whether a Buyer has an equivalent offsetting long position in the Common Stock, all Common Stock (i) that is owned by such Buyer or (ii) that would be issuable upon conversion or exercise in full of all Securities then held by such Buyer (assuming that such Securities were then fully convertible or exercisable, notwithstanding any provisions to the contrary, and giving effect to any conversion or exercise price adjustments that would take effect given only the passage of time) shall be deemed to be held long by such Buyer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) <u>Public Information</u>. At any time during the period commending from the six (6) month anniversary of the Closing Date and ending at such time that all of the Securities, if a registration statement is not available for the resale of all of the Securities may be sold without restriction or limitation pursuant to Rule 144, if the Company shall fail for any reason to satisfy the current public information requirement under Rule 144 (a "**Public Information Failure**") then, as partial relief for the damages to any holder of Securities by reason of any such delay in or reduction of its ability to sell the Securities (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall pay to each such holder an amount in cash equal to one percent (1.0%) of the aggregate Purchase Price of such holder's Securities on the day of a Public Information Failure and on every thirtieth day (pro rated for periods totaling less than thirty days) thereafter until the earlier of (i) the date such Public Information Failure is cured and (ii) such time that such public information is no longer required pursuant to Rule 144. The payments to which a holder shall be entitled pursuant to this Section 4(q) are referred to herein as "**Public Information Failure Payments**." Public Information Failure Payments shall be paid on the earlier of (I) the last day of the calendar month during which such Public Information Failure Payments are incurred and (II) the third Business Day after the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) <u>Closing Documents</u>. On or prior to fourteen (14) calendar days after the Closing Date, the Company agrees to deliver, or cause to be delivered, to each Buyer and Company executed copies of the Transaction Documents, Securities and other document required to be delivered to any party pursuant to Section 7 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>REGISTER; TRANSFER AGENT INSTRUCTIONS</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Register</u>. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to each holder of Securities), a register for the Notes, the Common Shares in which the Company shall record the name and address of the Person in whose name the Notes have been issued (including the name and address of each transferee), the principal amount of Notes held by such Person, the number of Conversion Shares issuable upon conversion of the Notes. The Company shall keep the register open and available at all times during business hours for inspection of any Buyer or its legal representatives.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL</u>.

The obligation of the Company hereunder to issue and sell the Notes and the related Common Shares to each Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Such Buyer shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Such Buyer and each other Buyer shall have delivered to the Company the Purchase Price for the Notes being purchased by such Buyer at the Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct as of such specified date), and such Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE</u>.

The obligation of each Buyer hereunder to purchase the Notes at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer's sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Company shall have duly executed and delivered to such Buyer (A) each of the Transaction Documents and, (B) the Notes (in such principal amounts as such Buyer shall request), being purchased by such Buyer at the Closing pursuant to this Agreement (in such amounts as such Buyer shall request) being purchased by such Buyer at the Closing pursuant to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Intentionally omitted</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Intentionally omitted.</u>

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) The Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company and each of its Subsidiaries in such entity's jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction, as of a date within 10 days of the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) The Company shall have delivered to such Buyer a certificate evidencing the Company's qualification as a foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company conducts business, as of a date within 10 days of the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) The Company shall have delivered to such Buyer a certified copy of the Articles of Incorporation as certified by the Secretary of State of the State (or comparable office of Nevada within ten (10) days of the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) The Company shall have delivered to such Buyer a certificate, executed by the Secretary of the Company and dated as of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company's Board of Directors in a form reasonably acceptable to such Buyer, (ii) the Articles of Incorporation and (iii) the Bylaws, each as in effect at the Closing, in the form attached hereto as <u>Exhibit</u><u> </u><u>J</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) The representations and warranties of the Company shall be true and correct as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct as of such specified date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Closing Date. Such Buyer shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form attached hereto as <u>Exhibit K</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) The Company shall have delivered to such Buyer a letter from the Company's transfer agent certifying the number of shares of Common Stock outstanding as of a date within five days of the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) The Common Stock (I) shall be designated for quotation or listed on the Principal Market and (II) shall not have been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the Principal Market have been threatened, as of the Closing Date, either (A) in writing by the SEC or the Principal Market or (B) by falling below the minimum listing maintenance requirements of the Principal Market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Securities.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) Within thirty (30) Business Days prior to the Closing, the Company shall have delivered or caused to be delivered to each Buyer (A) certified copies of UCC search results, listing all effective financing statements which name as debtor the Company or any of its Subsidiaries filed in the prior five years to perfect an interest in any assets thereof, together with copies of such financing statements, none of which, except as otherwise agreed in writing by the Buyers, shall cover any of the Collateral (as defined in the Security Documents) and the results of searches for any tax lien and judgment lien filed against such Person or its property, which results, except as otherwise agreed to in writing by the Buyers shall not show any such Liens (as defined in the Security Documents); and (B) a perfection certificate, duly completed and executed by the Company and each of its Subsidiaries, in form and substance satisfactory to the Buyers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) The Company shall have delivered to such Buyer such other documents relating to the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>TERMINATION</u>. In the event that the Closing shall not have occurred with respect to a Buyer on or before five (5) Business Days from the date hereof due to the Company's or such Buyer's failure to satisfy the conditions set forth in Sections 6 and 7 above (and the nonbreaching party's failure to waive such unsatisfied condition(s)), the nonbreaching party shall have the option to terminate this Agreement with respect to such breaching party at the close of business on such date without liability of any party to any other party; <u>provided</u>, <u>however</u>, that if this Agreement is terminated pursuant to this Section 8, the Company shall remain obligated to reimburse the non-breaching Buyers for the expenses described in Section 4(g) above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>MISCELLANEOUS</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Governing Law; Jurisdiction; Jury Trial</u>. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. **EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Counterparts</u>. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Headings</u>. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Severability</u>. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Entire Agreement; Amendments</u>. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements between the Buyers, the Company, their affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the holders of at least a majority of the aggregate number of Registrable Securities issued and issuable hereunder and under the Notes, and any amendment to this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities, as applicable. No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought. No such amendment shall be effective to the extent that it applies to less than all of the holders of the applicable Securities then outstanding. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration also is offered to all of the parties to the Transaction Documents, holders of Notes. The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing, the Company confirms that, except as set forth in this Agreement, no Buyer has made any commitment or promise or has any other obligation to provide any financing to the Company or otherwise.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Notices</u>. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:

Alpha Energy, Inc.<br> 14143 Denver West Parkway, Suite 100,

Golden, CO 80401

800-819-0604<br> Jay Leaver, Pres.

Jleaver@alpha-energy.us

With a copy to:

Law Office of Harvey Kesner

500 Fifth Avenue

Suite #938

New York, NY 10036

646-678-2543

Harvey@hkesnerlaw.com

If to a Buyer, to its address and facsimile number set forth on the Schedule of Buyers, with copies to such Buyer's representatives as set forth on the Schedule of Buyers, or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Successors and Assigns</u>. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Notes. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the holders of at least a majority of the aggregate number of Registrable Securities issued and issuable hereunder, including by way of a Fundamental Transaction (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes). A Buyer may assign some or all of its rights hereunder without the consent of the Company, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>No Third Party Beneficiaries</u>. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Survival</u>. Unless this Agreement is terminated under Section 8, the representations and warranties of the Company and the Buyers contained in Sections 2 and 3, and the agreements and covenants set forth in Sections 4, 5 and 9 shall survive the Closing. Each Buyer shall be responsible only for its own representations, warranties, agreements and covenants hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Further Assurances</u>. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>Indemnification</u>. In consideration of each Buyer's execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Company's other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless each Buyer and each other holder of the Securities and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons' agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the "**Indemnitees**") from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys' fees and disbursements (the "**Indemnified Liabilities**"), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company) and arising out of or resulting from (i) the execution, delivery, performance or enforcement of the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (ii) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (iii) any disclosure made by such Buyer pursuant to Section 4(i), or (iv) the status of such Buyer or holder of the Securities as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under applicable law.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>No Strict Construction</u>. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) <u>Remedies</u>. Each Buyer and each holder of the Securities shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under the Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or other security.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) <u>Rescission and Withdrawal Right</u>. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Buyer may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) <u>Payment Set Aside</u>. To the extent that the Company makes a payment or payments to the Buyers hereunder or pursuant to any of the other Transaction Documents or the Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) <u>Independent Nature of Buyers' Obligations and Rights</u>. The obligations of each Buyer under any Transaction Document are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Buyers are in any way acting in concert or as a group, and the Company will not assert any such claim with respect to such obligations or the transactions contemplated by the Transaction Documents and the Company acknowledges that the Buyers are not acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. The Company acknowledges and each Buyer confirms that it has independently participated in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose.

**[Signature Page Follows]**

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**IN WITNESS WHEREOF,** each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.

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| |
|:---|
| **COMPANY:**<br>|
| By:<u> </u><br> Name:<br> Title: |

---

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**IN WITNESS WHEREOF,** each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.

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| |
|:---|
| **BUYERS:** |
| 20 SHEKELS, INC. |
| By:____________________________________<br> Name: Jay Leaver<br> Title: President |

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**SCHEDULE OF BUYERS**

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| | | | |
|:---|:---|:---|:---|
| (1) | (2) | (3) | (4) |
| **Buyer** | **Address and**<br> **Facsimile/email** | **Aggregate**<br> **Principal**<br> **Amount of**<br> **Notes** | **Legal Representative's Address and Facsimile Number** |
| 20 Shekels, Inc. | 20 Shekels, Inc. PO Box 5196 Buena Vista, CO 81211;<br> jleaver@alpha-energy.us | $906754.00 |  |

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**<u>EXHIBITS</u>**

Exhibit A Form of Security Agreement

Exhibit B Form of Note

**<u>SCHEDULES</u>**

Schedule 3(a) <u>Subsidiaries</u>

Alpha Energy Texas Operating, LLC

Schedule 3(f) <u>Acknowledgment Regarding Buyer's Purchase of Securities</u>

AEI Acquisition Company, LLC (AEI Management, Inc., is the managing member and Harry McMillan is a control person thereof) is the holder of 15,880.201 shares of common stock, par value $0.001 per share, of the Company (approximately 74%) as reported on a Schedule 13D filed with the SEC.

Schedule 3(k) <u>SEC Documents</u>

The Company periodically has failed to file SEC filings and reports when due or within the period allowed by the SEC for extension, including, without limitation, an amendment to its Current Report on Form 8-K dated March 9, 2022 to include historical financial statements for the acquisition of certain assets from Progressive Well Service, LLC under a Purchase and Sale Agreement dated as of February 17, 2022.

Schedule 3(l) <u>Absence of Certain Changes</u>

None.

Schedule 3(q) <u>Transactions with Affiliates</u>

The Company is party to an agreement with Fidare Consulting Group. Fidare Consulting Group is affiliated with Harry McMillan. See Schedule 3(a).

The Company received advances from AEI Management, Inc., a Company owned by a significant shareholder, totaling $88,956 and $185,860 during the nine months ended September 30, 2022 and 2021, respectively. The advances are unsecured, non-interest bearing and are payable on demand. During the nine months ended September 30, 2022, the Company repaid $10,000 of the advances and converted $413,206 of advances to a senior secured convertible note due February 24, 2024.

The Company received advances from Jay Leaver, President of the Company, totaling $31,280 and $149,100 during the nine months ended September 30, 2022 and 2021, respectively. The advances are unsecured, non-interest bearing and is payable on demand. During the nine months ended September 30, 2022, the Company converted $325,580 of advances to a senior secured convertible note due February 24, 2024.

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As of September 30, 2022 and December 31, 2021, there was $0 and $628,550 of short-term advances due to related parties, respectively.

As of September 30, 2022, there was $203,484 of accounts payable related parties which consisted of $203,484 due to Leaverite Exploration, Inc. d/b/a Leaverite Consulting ("Leaverite Exploration"), a corporation wholly-owned by our President, Jay Leaver pursuant to a consulting agreement.

As of December 31, 2021, there was $228,668 of accounts payable related parties which consisted of $208,484 due to Leaverite Exploration, $4,394 due to former CFO John Lepin, $10,000 due Kelloff Oil &Gas, LLC, a limited liability company and $5,790 due to Staley Engineering LLC for consulting services.

On December 3, 2020, the Company executed a promissory note for $65,000 with Jay Leaver, our President. The unsecured note matured three years from date of issuance and bore interest at a rate of 5% per annum. As of December 31, 2021, the note payable had unpaid accrued interest in the amount of $13,003. On February 23, 2022, the promissory note was amended to a principal amount of $406,750, which includes the original $65,000 plus additional advances of $325,580, and accrued interest of $16,170. An additional $110,235 was advanced during the nine months ended September 30, 2022 maturing February 23, 2025. In February 2022, Mr. Leaver advanced an additional $500,000 to the Company. On February 25, 2022, Mr. Leaver's $406,750 promissory note and $500,000 advance were assigned to 20 Shekels, Inc, a corporation wholly-owned by Marshwiggle, LLC, a limited liability company jointly owned by Mr. Leaver and his spouse and on February 25, 2022 the Company issued $906,750 of its secured senior secured convertible notes due February 24, 2024, bearing interest at a rate of 7.25% per annum (the "7.25% Note") in exchange for the prior obligations. The 7.25% Note is convertible into shares of the Company's Common Stock at $5.00 per share. See Note 7 – Senior Secured Convertible Notes Payable.

Convertible Credit Line Payable

On June 1, 2021, the Company entered into a new convertible credit line agreement to borrow up to $1,500,000 and matures on June 1, 2023. The outstanding balance accrues interest at a rate of 7% per annum and the outstanding balance is convertible to common stock of the Company at the lesser of the close price of the common stock as quoted on the OTCBB on the day interest is due and payable immediately preceding the conversion or $4.00. The Company analyzed the conversion option in the convertible line of credit for derivative accounting consideration under ASC 815, Derivative and Hedging, and determined that the transaction does qualify for derivative treatment. The Company evaluated the new convertible credit line for debt modification in accordance with ASC 470-50 and concluded that the debt qualified for debt modification as the borrowing capacity under the new credit line is greater than the borrowing capacity under the original credit line. There were no fees paid to the creditor and no unamortized deferred costs on the original credit line. Accordingly, no expense was recognized in connection with the transaction. On August 8, 2021, the Company received $20,000 in cash proceeds from the credit line. During the nine months ended September 30, 2022, the Company amortized $5,395 of the discount as interest expense. As of September 30, 2022, and December 31, 2021, the unamortized discount was $5,705 and $11,100, respectively. During the nine months ended September 30, 2022, the Company repaid $30,000 of principal on the convertible credit line. The outstanding principal balance on the convertible credit line as of September 30, 2022 and December 31, 2021 amounted to $138,328 and $168,328, respectively.

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Senior Secured Convertible Notes Payable

On February 25, 2022, the Company entered into secured senior secured convertible note for the purchase and sale of convertible promissory notes ("Convertible Note") in the principal amount of $5,000,000. The Senior Convertible Note is convertible at any time after the date of issuance into shares of the Company's common stock at a fixed conversion price of $5.00 per share. Upon conversion of the convertible note into the Company's common stock, the noteholder would be issued 1,000,000 shares of the Company's common stock. Interest on the Convertible Note shall be paid to the investors at a rate of 7.25% per annum, paid on a quarterly basis, and the maturity date of the Convertible Note is two years after the issuance date. The Convertible Note purports to be secured by certain oil and gas leases, lands, minerals and other properties of the Company, subject to prior liens and security interests. See Note 4 – Related Party Transactions. $413,206 from a related party were exchanged for a Convertible Note. Due to the variable conversion price in the convertible credit line, this fixed senior secured convertible note is treated as derivatives due to possibility of insufficient shares available at conversion to settle the notes. The day one derivative liability was $65,262, which was recorded as a discount on the senior secured convertible notes payable. During the nine months ended September 30, 2022, the Company amortized $19,401 of the discount as interest expense. As of September 30, 2022, the unamortized discount was $45,862. The outstanding principal balance on the convertible credit line as of September 30, 2022 amounted to $413,206. See discussion of derivative liability in

On February 25, 2022, Mr. Leaver assigned a $406,750 promissory note and advances of $500,000 to 20 Shekels, an affiliated Company. On the same day, the assigned promissory note and advance totaling $906,750 were transferred into a secured senior secured convertible note. The convertible note bears interest at 7.25% and matures on February 25, 2024. The note is convertible into shares of the Company at $5.00 per share. Due to the variable convertible credit line, this fixed senior secured convertible note are treated as derivatives due to possibility of insufficient shares available at conversion to settle the notes. The day one derivative liability was $143,214, which was recorded as a discount on the senior secured convertible notes payable. During the nine months ended September 30, 2022, the Company amortized $42,572 of the discount as interest expense. As of September 30, 2022, the unamortized discount was $100,642. The outstanding principal balance on the convertible credit line as of September 30, 2022 amounted to $906,754. See discussion of derivative liability in Note 8 – Derivative Liability.

As of September 30, 2022, the senior secured convertible notes payable balance, net of discount was $1,173,456 with accrued interest of $8,878.

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Schedule 3(r) <u>Equity Capitalization</u>

See Schedule 3(q).

Schedule 3(s) <u>Indebtedness and Other Contracts</u>

See Schedule 3(q).

Schedule 3(t) <u>Absence of Litigation</u>

None.

Schedule 3(x) <u>Intellectual Property Rights</u>

The Company is aware of the existence of an Oklahoma corporation named Alpha Energy, Inc. which purports to be engaged in providing support services for the oil and gas industry. The Company has not relation to such entity.

Schedule 3(z) <u>Subsidiary Rights</u>

None.

Schedule 3(dd) Ranking of Notes

Parri passu with 7.25% Senior Secured Convertible Notes.

## Exhibit 10.4

**Exhibit 10.4**

**NOTE PURCHASE AGREEMENT**

**NOTE PURCHASE AGREEMENT** (the "**Agreement**"), dated as of December 31, 2022, by and among Alpha Energy, Inc., a Colorado corporation, with headquarters located at 14143 Denver West Parkway, Suite 100, Golden, CO 80401 (the "**Company**"), and the investors listed on the Schedule of Buyers attached hereto (individually, a "**Buyer**" and collectively, the "**Buyers**").

**WHEREAS**:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. The Company and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the "**1933 Act**"), and Rule 506 of Regulation D ("**Regulation D**") as promulgated by the United States Securities and Exchange Commission (the "**SEC**") under the 1933 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The Company has authorized a new series of senior secured convertible notes of the Company which notes shall be convertible into the Company's common stock, par value $0.001 per share (the "**Common Stock**"), in accordance with the terms of the Notes (as defined below).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, that aggregate principal amount of the Notes, in substantially the form attached hereto as <u>Exhibit A</u> (the "**Notes**"), set forth opposite such Buyer's name in column (3) on the Schedule of Buyers attached hereto (which aggregate amount for all Buyers shall be $5,000,000) (as converted, collectively, the "**Conversion Shares**"),

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. Intentionally omitted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. The Notes and the Conversion Shares, collectively are referred to herein as the "**Securities**".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. The Notes will rank senior to all outstanding and future indebtedness of the Company and will be secured by a first priority perfected security interest in certain assets of the Company consisting of the proceeds and production of 34 well bores and related assets under that certain Purchase and Sale Agreement with Progressive Well Service, LLC. (the "Logan 1 Collateral". The Notes shall not be secured by individual liens or mortgages on any individual leases, well bores or other assets as evidenced by (i) a security agreement, in the form attached hereto as <u>Exhibit A</u> (as amended or modified from time to time in accordance with its terms, the "**Security Agreement**" or the "**Security Documents**").

**NOW, THEREFORE**, the Company and each Buyer hereby agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>PURCHASE AND SALE OF NOTES</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Purchase of Notes</u>. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company on the Closing Date (as defined below), (x) a principal amount of Notes as is set forth opposite such Buyer's name in column (3) on the Schedule of Buyers (the "**Closing**").

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Closing</u>. The date and time of the Closing (the "**Closing Date**") shall be 10:00 a.m., New York City time, on the date hereof (or such later date as is mutually agreed to by the Company and each Buyer) after notification of satisfaction (or waiver) of the conditions to the Closing set forth in Sections 6 and 7 below at the offices of Harvey Kesner, Esq. 500 Fifth Avenue, New York, NY 10036, or by electronic exchange of documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Purchase Price</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The aggregate purchase price for the Notes, to be purchased by each such Buyer at the Closing (the "**Purchase Price**") shall be the amount set forth opposite each Buyer's name in column (4) of the Schedule of Buyers. Each Buyer shall pay $1,000 for each $1,000 of principal amount of Notes to be purchased by such Buyer at the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Form of Payment</u>. On the Closing Date, (i) each Buyer shall pay its Purchase Price to the Company for the Notes, by wire transfer of immediately available funds in accordance with the Company's written wire instructions (or by delivery for cancellation and exchange an equivalent amount of outstanding indebtedness of the Company due and owing to Buyer, in exchange for the Notes) and (ii) the Company shall deliver to each Buyer the Notes (allocated in the principal amounts as such Buyer shall request) which such Buyer is purchasing, in each case duly executed on behalf of the Company and registered in the name of such Buyer or its designee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>BUYER'S REPRESENTATIONS AND WARRANTIES</u>. Each Buyer, severally and not jointly, represents and warrants with respect to only itself that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>No Public Sale or Distribution</u>. Such Buyer is (i) acquiring the Notes, the and (ii) upon conversion of the Notes will acquire the Conversion Shares issuable upon conversion of the Notes, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act; <u>provided</u>, <u>however</u>, that by making the representations herein, such Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act. Such Buyer is acquiring the Securities hereunder in the ordinary course of its business. Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Accredited Investor/Dealer Status</u>. Such Buyer is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D. Buyer is not required to register as a "dealer" under the Securities Exchange Act of 1934.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Reliance on Exemptions</u>. Such Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Buyer's compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the Securities.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Information</u>. Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by such Buyer. Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect such Buyer's right to rely on the Company's representations and warranties contained herein. Such Buyer understands that its investment in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>No Governmental Review</u>. Such Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Transfer or Resale</u>. Such Buyer understands that: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company an opinion of counsel, in a generally acceptable form, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended, (or a successor rule thereto) (collectively, "**Rule 144**"); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person (as defined in Section 3(s)) through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. The Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Securities and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Buyer effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document (as defined in Section 3(b)), including, without limitation, this Section 2(f).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Legends</u>. Such Buyer understands that the certificates or other instruments representing the Notes, until such time as the resale of the Conversion Shares, have been registered under the 1933 Act, the stock certificates representing the Conversion Shares, except as set forth below, shall bear any legend as required by the "blue sky" laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

**[**NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE **[**CONVERTIBLE**] [**EXERCISABLE**]** HAVE BEEN**][**THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN**]** REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Securities upon which it is stamped or issue to such holder by electronic delivery at the applicable balance account at DTC (as defined below), unless otherwise required by state securities laws, (i) such Securities are registered for resale under the 1933 Act, (ii) in connection with a sale, assignment or other transfer, such holder provides the Company with an opinion of counsel, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the 1933 Act, or (iii) such holder provides the Company with reasonable assurance that the Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Validity; Enforcement</u>. This Agreement, and the Security Documents to which such Buyer is a party have been duly and validly authorized, executed and delivered on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>No Conflicts</u>. The execution, delivery and performance by such Buyer of this Agreement, and the Security Documents to which such Buyer is a party and the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Buyer or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Residency</u>. Such Buyer is a resident of that jurisdiction specified below its address on the Schedule of Buyers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>REPRESENTATIONS AND WARRANTIES OF THE COMPANY</u>.

The Company represents and warrants to each of the Buyers that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Organization and Qualification</u>. Each of the Company and its "**Subsidiaries**" (which for purposes of this Agreement means any entity in which the Company, directly or indirectly, owns any of the capital stock or holds an equity or similar interest) are entities duly organized and validly existing in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authorization to own their properties and to carry on their business as now being conducted. Each of the Company and its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. As used in this Agreement, "**Material Adverse Effect**" means any material adverse effect on the business, properties, assets, operations, results of operations, condition (financial or otherwise) or prospects of the Company and its Subsidiaries, taken as a whole, or on the transactions contemplated hereby and the other Transaction Documents or by the agreements and instruments to be entered into in connection herewith or therewith, or on the authority or ability of the Company to perform its obligations under the Transaction Documents (as defined below). The Company has no Subsidiaries except as set forth on <u>Schedule 3(a)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Authorization; Enforcement; Validity</u>. The Company has the requisite power and authority to enter into and perform its obligations under this Agreement, the Notes, and the Security Documents, and each of the other agreements entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively, the "**Transaction Documents**") and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Notes, and the reservation for issuance and the issuance of the Conversion Shares issuable upon conversion of the Notes, and the granting of a security interest in the Collateral (as defined in the Security Documents) have been duly authorized by the Company's Board of Directors and (other than (i) the filing of appropriate UCC financing statements with the appropriate states and other authorities pursuant to the Security Agreement, and (ii) no further filing, consent, or authorization is required by the Company, its Board of Directors or its stockholders. This Agreement and the other Transaction Documents of even date herewith have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Issuance of Securities</u>. The issuance of the Notes, are duly authorized and are free from all taxes, liens and charges with respect to the issue thereof. As of the applicable Closing, a number of shares of Common Stock shall have been duly authorized and reserved for issuance which equals or exceeds 130% of the aggregate of the maximum number of shares of Common Stock issuable upon conversion of the Notes. Upon conversion or payment in accordance with the Notes, the Conversion Shares, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. The offer and issuance by the Company of the Securities is exempt from registration under the 1933 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>No Conflicts</u>. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Notes, the granting of a security interest in the Collateral and reservation for issuance and issuance of the Conversion Shares) will not (i) result in a violation of any certificate of incorporation, certificate of formation, any certificate of designations or other constituent documents of the Company or any of its Subsidiaries, any capital stock of the Company or any of its Subsidiaries or the bylaws of the Company or any of its Subsidiaries or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal and state securities laws and regulations and the rules and regulations of the OTC Pink Open Markets, or such other market on which the Company's common stock shall become approved for trading (the "**Principal Market**")) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Consents</u>. Neither the Company nor any of its Subsidiaries is required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the Closing Date, and the Company and its Subsidiaries are unaware of any facts or circumstances which might prevent the Company from obtaining or effecting any of the registration, application or filings pursuant to the preceding sentence. The Company is not in violation of the listing requirements of the Principal Market and has no knowledge of any facts which would reasonably lead to delisting or suspension of the Common Stock in the foreseeable future.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Acknowledgment Regarding Buyer's Purchase of Securities</u>. The Company acknowledges and agrees that each Buyer is acting solely in the capacity of arm's length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and that no Buyer is (i) an officer or director of the Company, (ii) an "affiliate" of the Company or any of its Subsidiaries (as defined in Rule 144) or (iii) to the knowledge of the Company, a "beneficial owner" of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the "**1934 Act**")), other than as set forth on <u>Schedule 3(f).</u> The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer's purchase of the Securities. The Company further represents to each Buyer that the Company's decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>No General Solicitation; Placement Agent's Fees</u>. Neither the Company, nor any of its Subsidiaries or affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. The Company shall be responsible for the payment of any placement agent's fees, financial advisory fees, or brokers' commissions (other than for persons engaged by any Buyer or its investment advisor) relating to or arising out of the transactions contemplated hereby. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, attorney's fees and out-of-pocket expenses) arising in connection with any such claim. The Company has not engaged any placement agent or other agent in connection with the sale of the Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>No Integrated Offering</u>. None of the Company, its Subsidiaries, any of their affiliates, and any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Securities under the 1933 Act or cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of the 1933 Act or any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated. None of the Company, its Subsidiaries, their affiliates and any Person acting on their behalf will take any action or steps referred to in the preceding sentence that would require registration of any of the Securities under the 1933 Act or cause the offering of the Securities to be integrated with other offerings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Dilutive Effect</u>. The Company understands and acknowledges that the number of Conversion Shares issuable upon conversion of the Notes will increase in certain circumstances. The Company further acknowledges that its obligation to issue Conversion Shares upon conversion of the Notes in accordance with this Agreement and the Notes is, in each case, is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Application of Takeover Protections; Rights Agreement</u>. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Articles of Incorporation or the laws of the jurisdiction of its formation which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the Company's issuance of the Securities and any Buyer's ownership of the Securities. The Company has not adopted a stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>SEC Documents; Financial Statements</u>. Except as disclosed in <u>Schedule 3(k)</u>, during the two (2) years prior to the date hereof, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the "**SEC Documents**"). The Company has delivered to the Buyers or their respective representatives true, correct and complete copies of the SEC Documents not available on the EDGAR system. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). No other information provided by or on behalf of the Company to the Buyers which is not included in the SEC Documents, including, without limitation, information referred to in Section 2(d) of this Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstance under which they are or were made, not misleading.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>Absence of Certain Changes</u>. Except as disclosed in <u>Schedule 3(l)</u>, since March 31, 2022, there has been no material adverse change and no material adverse development in the business, properties, operations, condition (financial or otherwise), results of operations or prospects of the Company or its Subsidiaries. Except as disclosed in <u>Schedule 3(l)</u>, since March 31, 2022, the Company has not (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, in excess of $100,000 outside of the ordinary course of business or (iii) had capital expenditures, individually or in the aggregate, in excess of $100,000 outside the ordinary course of business. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. The Company is not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes of this Section 3(l), "**Insolvent**" means, with respect to any Person (as defined in Section 3(s), (i) the present fair saleable value of such Person's assets is less than the amount required to pay such Person's total Indebtedness (as defined in Section 3(s)), (ii) such Person is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) the Company intends to incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature or (iv) such Person has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) <u>No Undisclosed Events, Liabilities, Developments or Circumstances</u>. No event, liability, development or circumstance has occurred or exists, or is contemplated to occur with respect to the Company, its Subsidiaries or their respective business, properties, prospects, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) <u>Conduct of Business; Regulatory Permits</u>. Neither the Company nor its Subsidiaries is in violation of any term of or in default under any certificate of designations of any outstanding series of preferred stock of the Company, its Articles of Incorporation or Bylaws or their organizational charter or certificate of incorporation or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except for possible violations which would not, individually or in the aggregate, have a Material Adverse Effect. Without limiting the generality of the foregoing, the Company is not in violation of any of the rules, regulations or requirements of the Principal Market and has no knowledge of any facts or circumstances which would reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future. During the two years prior to the date hereof, the Common Stock has been designated for quotation on the Principal Market. During the two years prior to the date hereof, (i) trading in the Common Stock has not been suspended by the SEC or the Principal Market and (ii) the Company has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting of the Common Stock from the Principal Market. The Company and its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) <u>Foreign Corrupt Practices</u>. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other Person acting on behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on behalf of, the Company or any of its Subsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) <u>Sarbanes-Oxley Act</u>. The Company is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) <u>Transactions With Affiliates</u>. Except as set on <u>Schedule 3(q)</u>, none of the officers, directors or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for ordinary course services as employees, officers or directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such officer, director or employee or, to the knowledge of the Company or any of its Subsidiaries, any corporation, partnership, trust or other entity in which any such officer, director, or employee has a substantial interest or is an officer, director, trustee or partner.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) <u>Equity Capitalization</u>. As of the date hereof, the authorized capital stock of the Company consists of (i) 65,000,000 shares of Common Stock, of which as of the date hereof, 21,501,206 are issued and outstanding, 2,824,000 shares are reserved for issuance pursuant to the Company's stock option and purchase plans and no shares are reserved for issuance pursuant to securities (other than the aforementioned options and the Notes) exercisable or exchangeable for, or convertible into, shares of Common Stock and (ii) 2,000,000 shares of preferred stock, par value $0.001 per share, of which as of the date hereof, none are issued and outstanding. All of such outstanding shares have been, or upon issuance will be, validly issued and are fully paid and nonassessable. Except as disclosed in <u>Schedule 3(r)</u>: (i) none of the Company's capital stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries; (iii) there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound; (iv) there are no financing statements securing obligations in any material amounts, either singly or in the aggregate, filed in connection with the Company or any of its Subsidiaries; (v) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act; (vi) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (vii) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; (viii) the Company does not have any stock appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement; and (ix) the Company and its Subsidiaries have no liabilities or obligations required to be disclosed in the SEC Documents but not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company's or its Subsidiaries' respective businesses and which, individually or in the aggregate, do not or would not have a Material Adverse Effect. The Company has furnished to the Buyers true, correct and complete copies of the Company's Articles of Incorporation, as amended and as in effect on the date hereof (the "**Articles of Incorporation**"), and the Company's Bylaws, as amended and as in effect on the date hereof (the "**Bylaws**"), and the terms of all securities convertible into, or exercisable or exchangeable for, shares of Common Stock and the material rights of the holders thereof in respect thereto.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) <u>Indebtedness and Other Contracts</u>. Except as disclosed in <u>Schedule 3(s)</u>, neither the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness (as defined below), (ii) is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument would result in a Material Adverse Effect, (iii) is in violation of any term of or in default under any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (iv) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company's officers, has or is expected to have a Material Adverse Effect. <u>Schedule 3(s)</u> provides a detailed description of the material terms of any such outstanding Indebtedness. For purposes of this Agreement: (x) "**Indebtedness**" of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services, including (without limitation) "capital leases" in accordance with generally accepted accounting principles (other than trade payables entered into in the ordinary course of business), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with generally accepted accounting principles, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; (y) "**Contingent Obligation**" means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto; and (z) "**Person**" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) <u>Absence of Litigation</u>. There is no action, suit, proceeding, inquiry or investigation before or by the Principal Market, any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company's Subsidiaries or any of the Company's or its Subsidiaries' officers or directors in their capacities as such except such that would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, except as set forth in <u>Schedule 3(t)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) <u>Intentionally omitted</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>Employee Relations</u>. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member of a union. The Company and its Subsidiaries believe that their relations with their employees are good. No executive officer of the Company or any of its Subsidiaries (as defined in Rule 501(f) of the 1933 Act) has notified the Company or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary or otherwise terminate such officer's employment with the Company or any such Subsidiary. No executive officer of the Company or any of its Subsidiaries, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) <u>Title</u>. The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and any of its Subsidiaries except where failure such liens, encumbrances and defects would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. Any real property and facilities held under lease by the Company and any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries except where such defects or exceptions would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) <u>Intellectual Property Rights</u>. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights ("**Intellectual Property Rights**") necessary to conduct their respective businesses as now conducted. Except as set forth in <u>Schedule 3(x)</u>, none of the Company's Intellectual Property Rights have expired or terminated, or are expected to expire or terminate, within three years from the date of this Agreement. The Company does not have any knowledge of any infringement by the Company or its Subsidiaries of Intellectual Property Rights of others. There is no claim, action or proceeding being made or brought, or to the knowledge of the Company or its Subsidiaries, being threatened, against the Company or its Subsidiaries regarding its Intellectual Property Rights. The Company is unaware of any facts or circumstances which might give rise to any of the foregoing infringements or claims, actions or proceedings. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) <u>Intentionally omitted.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) <u>Subsidiary Rights</u>. Except as set forth in <u>Schedule 3(z)</u>, the Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or such Subsidiary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa) <u>Investment Company Status</u>. The Company is not, and upon consummation of the sale of the Securities will not be, an "investment company," a company controlled by an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb) <u>Tax Status</u>. The Company and each of its Subsidiaries (i) has made or filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc) <u>Off Balance Sheet Arrangements</u>. There is no transaction, arrangement, or other relationship between the Company and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its Exchange Act filings and is not so disclosed or that otherwise would be reasonably likely to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd) <u>Ranking of Notes</u>. Except as set forth on <u>Schedule 3(dd)</u>, no Indebtedness of the Company is senior to or ranks *pari passu* with the Notes in right of payment, whether with respect of payment of redemptions, interest, damages or upon liquidation or dissolution or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee) <u>Eligibility for Registration</u>. The Company is eligible to register the Conversion Shares, for resale by the Buyers using Form S-1 promulgated under the 1933 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff) <u>Disclosure</u>. The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, nonpublic information. The Company understands and confirms that each of the Buyers will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to the Buyers regarding the Company, or any of its Subsidiaries, their business and the transactions contemplated hereby, including the Schedules to this Agreement, furnished by or on behalf of the Company is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Each press release issued by the Company or any of its Subsidiaries during the twelve (12) months preceding the date of this Agreement did not at the time of release contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>COVENANTS</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Best Efforts</u>. Each party shall use its best efforts timely to satisfy each of the conditions to be satisfied by it as provided in Sections 6 and 7 of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Form D and Blue Sky</u>. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to each Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Securities for sale to the Buyers at the Closing pursuant to this Agreement under applicable securities or "Blue Sky" laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyers on or prior to the Closing Date. The Company shall make all filings and reports relating to the offer and sale of the Securities required under applicable securities or "Blue Sky" laws of the states of the United States following the Closing Date.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Reporting Status</u>. Until the date on which the Investors shall have sold all the Conversion Shares and none of the Notes is outstanding (the "**Reporting Period**"), the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Use of Proceeds</u>. The Company will use the proceeds from the sale of the Securities for general corporate and for working capital purposes and not for (i) the repayment of any outstanding Indebtedness of the Company or any of its Subsidiaries, (ii) the redemption or repurchase of any of its or its Subsidiaries' equity securities or (iii) the settlement of any claims, actions or proceedings against the Company or any of its Subsidiaries, except as set forth on the schedules hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Financial Information</u>. The Company agrees to send the following to each Investor during the Reporting Period (i) unless the following are filed with the SEC through EDGAR and are available to the public through the EDGAR system, within one (1) Business Day after the filing thereof with the SEC, a copy of its Annual Reports and Quarterly Reports on Form 10-K, 10-KSB, 10-Q or 10-QSB, any interim reports or any consolidated balance sheets, income statements, stockholders' equity statements and/or cash flow statements for any period other than annual, any Current Reports on Form 8-K and any registration statements (other than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) on the same day as the release thereof, facsimile or e-mailed copies of all press releases issued by the Company or any of its Subsidiaries, and (iii) copies of any notices and other information made available or given to the stockholders of the Company generally, contemporaneously with the making available or giving thereof to the stockholders. As used herein, "**Business Day**" means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Listing</u>. The Company shall promptly secure the listing of all of the Conversion Securities and shall maintain such listing of all Conversion Securities from time to time issuable under the terms of the Transaction Documents. The Company shall maintain the Common Stocks' authorization for quotation on the Principal Market. Neither the Company nor any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(f).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Fees</u>. The Company shall reimburse Buyer or its designee(s) (in addition to any other expense amounts paid to any Buyer prior to the date of this Agreement) for all reasonable costs and expenses incurred in connection with the transactions contemplated by the Transaction Documents (including all reasonable legal fees and disbursements in connection therewith, documentation and implementation of the transactions contemplated by the Transaction Documents and due diligence in connection therewith), which amount shall be withheld by such Buyer from its Purchase Price at the Closing. The Company shall be responsible for the payment of any placement agent's fees, financial advisory fees, or broker's commissions (other than for Persons engaged by any Buyer) relating to or arising out of the transactions contemplated hereby, including, without limitation, any fees or commissions payable to the Placement Agent. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorney's fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Securities to the Buyers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Pledge of Securities</u>. The Company acknowledges and agrees that the Securities may be pledged by an Investor in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Investor effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation, Section 2(f) hereof; provided that an Investor and its pledgee shall be required to comply with the provisions of Section 2(f) hereof in order to effect a sale, transfer or assignment of Securities to such pledgee. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by an Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Disclosure of Transactions and Other Material Information</u>. On or before 8:30 a.m., New York City time, on the fourth (4<sup>th</sup>) Business Day following the date of this Agreement, the Company shall issue a press release and file a Current Report on Form 8-K describing the terms of the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and attaching the material Transaction Documents (including, without limitation, this Agreement, the form of the Notes, and the form of Security Documents as exhibits to such filing (including all attachments, the "**8**-**K Filing**"). From and after the filing of the 8-K Filing with the SEC, no Buyer shall be in possession of any material, nonpublic information received from the Company, any of its Subsidiaries or any of their respective officers, directors, employees or agents, that is not disclosed in the 8-K Filing. The Company shall not, and shall cause each of its Subsidiaries and its and each of their respective officers, directors, employees and agents, not to, provide any Buyer with any material, nonpublic information regarding the Company or any of its Subsidiaries from and after the filing of the 8-K Filing with the SEC without the express written consent of such Buyer. If a Buyer has, or believes it has, received any such material, nonpublic information regarding the Company or any of its Subsidiaries, it shall provide the Company with written notice thereof. The Company shall, within two (2) Trading Days (as defined in the Notes) of receipt of such notice, make public disclosure of such material, nonpublic information. In the event of a breach of the foregoing covenant by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees and agents, in addition to any other remedy provided herein or in the Transaction Documents, a Buyer shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such material, nonpublic information without the prior approval by the Company, its Subsidiaries, or any of its or their respective officers, directors, employees or agents. No Buyer shall have any liability to the Company, its Subsidiaries, or any of its or their respective officers, directors, employees, stockholders or agents for any such disclosure. Subject to the foregoing, neither the Company, its Subsidiaries nor any Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of any Buyer, to make any press release or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) each Buyer shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release). Without the prior written consent of any applicable Buyer, neither the Company nor any of its Subsidiaries or affiliates shall disclose the name of such Buyer in any filing, announcement, release or otherwise.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Restriction on Redemption and Cash Dividends</u>. So long as any Notes are outstanding, the Company shall not, directly or indirectly, redeem, or declare or pay any cash dividend or distribution on, the Common Stock without the prior express written consent of the holders of Notes representing not less than a majority of the aggregate principal amount of the then outstanding Notes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Additional Notes; Variable Securities; Dilutive Issuances</u>. For so long as any Notes remain outstanding, the Company shall not, in any manner, issue or sell any rights, warrants or options to subscribe for or purchase Common Stock or directly or indirectly convertible into or exchangeable or exercisable for Common Stock at a price which varies or may vary with the market price of the Common Stock, including by way of one or more reset(s) to any fixed price unless the conversion, exchange or exercise price of any such security cannot be less than the then applicable Conversion Price (as defined in the Notes) with respect to the Common Stock into which any Note is convertible with respect to the Common Stock into which any Warrant is exercisable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>Corporate Existence</u>. So long as any Buyer beneficially owns any Securities, the Company shall not be party to any Fundamental Transaction (as defined in the Notes) unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>Reservation of Shares</u>. So long as any Buyer owns any Securities, the Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than 100% of the sum of the number of shares of Common Stock issuable (i) upon conversion of the Notes then outstanding (without taking into account any limitations on the conversion of the Notes set forth in the Notes).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) <u>Conduct of Business</u>. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or regulation of any governmental entity, except where such violations would not result, either individually or in the aggregate, in a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) <u>Intentionally omitted.</u>

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) <u>Collateral Agent</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Each Buyer hereby (a) appoints AEI Management, Inc., as the collateral agent hereunder and under the other Security Documents (in such capacity, the "**Collateral Agent**"), and (b) authorizes the Collateral Agent (and its officers, directors, employees and agents) to take such action on such Buyer's behalf in accordance with the terms hereof and thereof. The Collateral Agent shall not have, by reason hereof or any of the other Security Documents, a fiduciary relationship in respect of any Buyer. Neither the Collateral Agent nor any of its officers, directors, employees and agents shall have any liability to any Buyer for any action taken or omitted to be taken in connection hereof or any other Security Document except to the extent caused by its own gross negligence or willful misconduct, and each Buyer agrees to defend, protect, indemnify and hold harmless the Collateral Agent and all of its officers, directors, employees and agents (collectively, the "**Indemnitees**") from and against any losses, damages, liabilities, obligations, penalties, actions, judgments, suits, fees, costs and expenses (including, without limitation, reasonable attorneys' fees, costs and expenses) incurred by such Indemnitee, whether direct, indirect or consequential, arising from or in connection with the performance by such Indemnitee of the duties and obligations of Collateral Agent pursuant hereto or any of the Security Documents. The Collateral Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the holders of at least a majority in principal amount of the Notes then outstanding, and such instructions shall be binding upon all holders of Notes; <u>provided</u>, <u>however</u>, that the Collateral Agent shall not be required to take any action which, in the reasonable opinion of the Agent, exposes the Agent to liability or which is contrary to this Agreement or any other Transaction Document or applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Collateral Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any telephone message believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person, and with respect to all matters pertaining to this Agreement or any of the other Transaction Documents and its duties hereunder or thereunder, upon advice of counsel selected by it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Collateral Agent may resign from the performance of all its functions and duties hereunder and under the Notes and the Security Documents at any time by giving at least ten (10) Business Days prior written notice to the Company and each holder of the Notes. Such resignation shall take effect upon the acceptance by a successor Collateral Agent of appointment as provided below. Upon any such notice of resignation, the holders of a majority of the outstanding principal under the Notes shall appoint a successor Collateral Agent. Upon the acceptance of the appointment as Collateral Agent, such successor Collateral Agent shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent, and the retiring Collateral Agent shall be discharged from its duties and obligations under this Agreement, the Notes and the other Security Documents. After any Collateral Agent's resignation hereunder , the provisions of this Section 4(n) shall inure to its benefit. If a successor Collateral Agent shall not have been so appointed within said ten (10) Business Day period, the retiring Collateral Agent shall then appoint a successor Collateral Agent who shall serve until such time, if any, as the holders of a majority of the outstanding principal under the Notes appoint a successor Collateral Agent as provided above.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) <u>Trading in Common Stock</u>. With respect to any Buyer, for so long as such Buyer owns any Notes, such Buyer shall not maintain a Net Short Position. For purposes of this Section, a "**Net Short Position**" by a Buyer means a position whereby such Buyer has executed one or more sales of Common Stock that is marked as a short sale and that is executed at a time when such Buyer has no equivalent offsetting long position in the Common Stock or contract for the foregoing. For purposes of determining whether a Buyer has an equivalent offsetting long position in the Common Stock, all Common Stock (i) that is owned by such Buyer or (ii) that would be issuable upon conversion or exercise in full of all Securities then held by such Buyer (assuming that such Securities were then fully convertible or exercisable, notwithstanding any provisions to the contrary, and giving effect to any conversion or exercise price adjustments that would take effect given only the passage of time) shall be deemed to be held long by such Buyer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) <u>Public Information</u>. At any time during the period commending from the six (6) month anniversary of the Closing Date and ending at such time that all of the Securities, if a registration statement is not available for the resale of all of the Securities may be sold without restriction or limitation pursuant to Rule 144, if the Company shall fail for any reason to satisfy the current public information requirement under Rule 144 (a "**Public Information Failure**") then, as partial relief for the damages to any holder of Securities by reason of any such delay in or reduction of its ability to sell the Securities (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall pay to each such holder an amount in cash equal to one percent (1.0%) of the aggregate Purchase Price of such holder's Securities on the day of a Public Information Failure and on every thirtieth day (pro rated for periods totaling less than thirty days) thereafter until the earlier of (i) the date such Public Information Failure is cured and (ii) such time that such public information is no longer required pursuant to Rule 144. The payments to which a holder shall be entitled pursuant to this Section 4(q) are referred to herein as "**Public Information Failure Payments**." Public Information Failure Payments shall be paid on the earlier of (I) the last day of the calendar month during which such Public Information Failure Payments are incurred and (II) the third Business Day after the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) <u>Closing Documents</u>. On or prior to fourteen (14) calendar days after the Closing Date, the Company agrees to deliver, or cause to be delivered, to each Buyer and Company executed copies of the Transaction Documents, Securities and other document required to be delivered to any party pursuant to Section 7 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>REGISTER; TRANSFER AGENT INSTRUCTIONS</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Register</u>. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to each holder of Securities), a register for the Notes, the Common Shares in which the Company shall record the name and address of the Person in whose name the Notes have been issued (including the name and address of each transferee), the principal amount of Notes held by such Person, the number of Conversion Shares issuable upon conversion of the Notes. The Company shall keep the register open and available at all times during business hours for inspection of any Buyer or its legal representatives.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL</u>.

The obligation of the Company hereunder to issue and sell the Notes and the related Common Shares to each Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Such Buyer shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Such Buyer and each other Buyer shall have delivered to the Company the Purchase Price for the Notes being purchased by such Buyer at the Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct as of such specified date), and such Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE</u>.

The obligation of each Buyer hereunder to purchase the Notes at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer's sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Company shall have duly executed and delivered to such Buyer (A) each of the Transaction Documents and, (B) the Notes (in such principal amounts as such Buyer shall request), being purchased by such Buyer at the Closing pursuant to this Agreement (in such amounts as such Buyer shall request) being purchased by such Buyer at the Closing pursuant to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Intentionally omitted</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Intentionally omitted.</u>

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) The Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company and each of its Subsidiaries in such entity's jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction, as of a date within 10 days of the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) The Company shall have delivered to such Buyer a certificate evidencing the Company's qualification as a foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company conducts business, as of a date within 10 days of the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) The Company shall have delivered to such Buyer a certified copy of the Articles of Incorporation as certified by the Secretary of State of the State (or comparable office of Nevada within ten (10) days of the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) The Company shall have delivered to such Buyer a certificate, executed by the Secretary of the Company and dated as of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company's Board of Directors in a form reasonably acceptable to such Buyer, (ii) the Articles of Incorporation and (iii) the Bylaws, each as in effect at the Closing, in the form attached hereto as <u>Exhibit</u><u> </u><u>J</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) The representations and warranties of the Company shall be true and correct as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct as of such specified date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Closing Date. Such Buyer shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form attached hereto as <u>Exhibit K</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) The Company shall have delivered to such Buyer a letter from the Company's transfer agent certifying the number of shares of Common Stock outstanding as of a date within five days of the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) The Common Stock (I) shall be designated for quotation or listed on the Principal Market and (II) shall not have been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the Principal Market have been threatened, as of the Closing Date, either (A) in writing by the SEC or the Principal Market or (B) by falling below the minimum listing maintenance requirements of the Principal Market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Securities.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) Within thirty (30) Business Days prior to the Closing, the Company shall have delivered or caused to be delivered to each Buyer (A) certified copies of UCC search results, listing all effective financing statements which name as debtor the Company or any of its Subsidiaries filed in the prior five years to perfect an interest in any assets thereof, together with copies of such financing statements, none of which, except as otherwise agreed in writing by the Buyers, shall cover any of the Collateral (as defined in the Security Documents) and the results of searches for any tax lien and judgment lien filed against such Person or its property, which results, except as otherwise agreed to in writing by the Buyers shall not show any such Liens (as defined in the Security Documents); and (B) a perfection certificate, duly completed and executed by the Company and each of its Subsidiaries, in form and substance satisfactory to the Buyers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) The Company shall have delivered to such Buyer such other documents relating to the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>TERMINATION</u>. In the event that the Closing shall not have occurred with respect to a Buyer on or before five (5) Business Days from the date hereof due to the Company's or such Buyer's failure to satisfy the conditions set forth in Sections 6 and 7 above (and the nonbreaching party's failure to waive such unsatisfied condition(s)), the nonbreaching party shall have the option to terminate this Agreement with respect to such breaching party at the close of business on such date without liability of any party to any other party; <u>provided</u>, <u>however</u>, that if this Agreement is terminated pursuant to this Section 8, the Company shall remain obligated to reimburse the non-breaching Buyers for the expenses described in Section 4(g) above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>MISCELLANEOUS</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Governing Law; Jurisdiction; Jury Trial</u>. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. **EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Counterparts</u>. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Headings</u>. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Severability</u>. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Entire Agreement; Amendments</u>. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements between the Buyers, the Company, their affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the holders of at least a majority of the aggregate number of Registrable Securities issued and issuable hereunder and under the Notes, and any amendment to this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities, as applicable. No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought. No such amendment shall be effective to the extent that it applies to less than all of the holders of the applicable Securities then outstanding. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration also is offered to all of the parties to the Transaction Documents, holders of Notes. The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing, the Company confirms that, except as set forth in this Agreement, no Buyer has made any commitment or promise or has any other obligation to provide any financing to the Company or otherwise.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Notices</u>. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:

Alpha Energy, Inc.<br> 14143 Denver West Parkway, Suite 100,

Golden, CO 80401

800-819-0604<br> Jay Leaver, Pres.

Jleaver@alpha-energy.us

With a copy to:

Law Office of Harvey Kesner

500 Fifth Avenue

Suite #938

New York, NY 10036

646-678-2543

Harvey@hkesnerlaw.com

If to a Buyer, to its address and facsimile number set forth on the Schedule of Buyers, with copies to such Buyer's representatives as set forth on the Schedule of Buyers, or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Successors and Assigns</u>. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Notes. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the holders of at least a majority of the aggregate number of Registrable Securities issued and issuable hereunder, including by way of a Fundamental Transaction (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes). A Buyer may assign some or all of its rights hereunder without the consent of the Company, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>No Third Party Beneficiaries</u>. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Survival</u>. Unless this Agreement is terminated under Section 8, the representations and warranties of the Company and the Buyers contained in Sections 2 and 3, and the agreements and covenants set forth in Sections 4, 5 and 9 shall survive the Closing. Each Buyer shall be responsible only for its own representations, warranties, agreements and covenants hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Further Assurances</u>. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>Indemnification</u>. In consideration of each Buyer's execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Company's other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless each Buyer and each other holder of the Securities and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons' agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the "**Indemnitees**") from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys' fees and disbursements (the "**Indemnified Liabilities**"), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company) and arising out of or resulting from (i) the execution, delivery, performance or enforcement of the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (ii) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (iii) any disclosure made by such Buyer pursuant to Section 4(i), or (iv) the status of such Buyer or holder of the Securities as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under applicable law.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>No Strict Construction</u>. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) <u>Remedies</u>. Each Buyer and each holder of the Securities shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under the Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or other security.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) <u>Rescission and Withdrawal Right</u>. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Buyer may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) <u>Payment Set Aside</u>. To the extent that the Company makes a payment or payments to the Buyers hereunder or pursuant to any of the other Transaction Documents or the Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) <u>Independent Nature of Buyers' Obligations and Rights</u>. The obligations of each Buyer under any Transaction Document are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Buyers are in any way acting in concert or as a group, and the Company will not assert any such claim with respect to such obligations or the transactions contemplated by the Transaction Documents and the Company acknowledges that the Buyers are not acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. The Company acknowledges and each Buyer confirms that it has independently participated in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose.

**[Signature Page Follows]**

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**IN WITNESS WHEREOF,** each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.

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| |
|:---|
| **COMPANY:** |
| By:<u> </u><u> </u><br> Name:<br> Title: |

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**IN WITNESS WHEREOF,** each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.

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| |
|:---|
| **BUYERS:** |
| AEI MANAGEMENT, INC. |
| By:____________________________________<br> Name: Harry McMillan<br> Title: duly authorized officer |

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**SCHEDULE OF BUYERS**

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| | | | |
|:---|:---|:---|:---|
| (1) | (2) | (3) | (4) |
| **Buyer** | **Address and**<br> **Facsimile/email** | **Aggregate**<br> **Principal**<br> **Amount of**<br> **Notes** | **Legal Representative's Address and Facsimile Number** |
| AEI Management, Inc. | 2600 E. Southlake Blvd., Suite 120-336, Southlake, Texas 76092;<br> harrymcmillan@gmail.com | $413206.00 |  |

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**<u>EXHIBITS</u>**

Exhibit A Form of Security Agreement

Exhibit B Form of Note

**<u>SCHEDULES</u>**

Schedule 3(a) <u>Subsidiaries</u>

Alpha Energy Texas Operating, LLC

Schedule 3(f) <u>Acknowledgment Regarding Buyer's Purchase of Securities</u>

AEI Acquisition Company, LLC (AEI Management, Inc., is the managing member and Harry McMillan is a control person thereof) is the holder of 15,880.201 shares of common stock, par value $0.001 per share, of the Company (approximately 74%) as reported on a Schedule 13D filed with the SEC.

Schedule 3(k) <u>SEC Documents</u>

The Company periodically has failed to file SEC filings and reports when due or within the period allowed by the SEC for extension, including, without limitation, an amendment to its Current Report on Form 8-K dated March 9, 2022 to include historical financial statements for the acquisition of certain assets from Progressive Well Service, LLC under a Purchase and Sale Agreement dated as of February 17, 2022.

Schedule 3(l) <u>Absence of Certain Changes</u>

None.

Schedule 3(q) <u>Transactions with Affiliates</u>

The Company is party to an agreement with Fidare Consulting Group. Fidare Consulting Group is affiliated with Harry McMillan. See Schedule 3(a).

The Company received advances from AEI Management, Inc., a Company owned by a significant shareholder, totaling $88,956 and $185,860 during the nine months ended September 30, 2022 and 2021, respectively. The advances are unsecured, non-interest bearing and are payable on demand. During the nine months ended September 30, 2022, the Company repaid $10,000 of the advances and converted $413,206 of advances to a senior secured convertible note due February 24, 2024.

The Company received advances from Jay Leaver, President of the Company, totaling $31,280 and $149,600 during the nine months ended September 30, 2022 and 2021, respectively. The advances are unsecured, non-interest bearing and is payable on demand. During the nine months ended September 30, 2022, the Company converted $325,580 of advances to a senior secured convertible note due February 24, 2024.

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As of September 30, 2022 and December 31, 2021, there was $0 and $628,550 of short-term advances due to related parties, respectively.

As of September 30, 2022, there was $203,484 of accounts payable related parties which consisted of $203,484 due to Leaverite Exploration, Inc. d/b/a Leaverite Consulting ("Leaverite Exploration"), a corporation wholly-owned by our President, Jay Leaver pursuant to a consulting agreement.

As of December 31, 2021, there was $228,668 of accounts payable related parties which consisted of $208,484 due to Leaverite Exploration, $4,394 due to former CFO John Lepin, $10,000 due Kelloff Oil &Gas, LLC, a limited liability company and $5,790 due to Staley Engineering LLC for consulting services.

On December 3, 2020, the Company executed a promissory note for $65,000 with Jay Leaver, our President. The unsecured note matured three years from date of issuance and bore interest at a rate of 5% per annum. As of December 31, 2021, the note payable had unpaid accrued interest in the amount of $13,003. On February 23, 2022, the promissory note was amended to a principal amount of $406,750, which includes the original $65,000 plus additional advances of $325,580, and accrued interest of $16,170. An additional $110,235 was advanced during the nine months ended September 30, 2022 maturing February 23, 2025. In February 2022, Mr. Leaver advanced an additional $500,000 to the Company. On February 25, 2022, Mr. Leaver's $406,750 promissory note and $500,000 advance were assigned to 20 Shekels, Inc, a corporation wholly-owned by Marshwiggle, LLC, a limited liability company jointly owned by Mr. Leaver and his spouse and on February 25, 2022 the Company issued $906,750 of its secured senior secured convertible notes due February 24, 2024, bearing interest at a rate of 7.25% per annum (the "7.25% Note") in exchange for the prior obligations. The 7.25% Note is convertible into shares of the Company's Common Stock at $5.00 per share. See Note 7 – Senior Secured Convertible Notes Payable.

Convertible Credit Line Payable

On June 1, 2021, the Company entered into a new convertible credit line agreement to borrow up to $1,500,000 and matures on June 1, 2023. The outstanding balance accrues interest at a rate of 7% per annum and the outstanding balance is convertible to common stock of the Company at the lesser of the close price of the common stock as quoted on the OTCBB on the day interest is due and payable immediately preceding the conversion or $4.00. The Company analyzed the conversion option in the convertible line of credit for derivative accounting consideration under ASC 815, Derivative and Hedging, and determined that the transaction does qualify for derivative treatment. The Company evaluated the new convertible credit line for debt modification in accordance with ASC 470-50 and concluded that the debt qualified for debt modification as the borrowing capacity under the new credit line is greater than the borrowing capacity under the original credit line. There were no fees paid to the creditor and no unamortized deferred costs on the original credit line. Accordingly, no expense was recognized in connection with the transaction. On August 8, 2021, the Company received $20,000 in cash proceeds from the credit line. During the nine months ended September 30, 2022, the Company amortized $5,395 of the discount as interest expense. As of September 30, 2022, and December 31, 2021, the unamortized discount was $5,705 and $11,100, respectively. During the nine months ended September 30, 2022, the Company repaid $30,000 of principal on the convertible credit line. The outstanding principal balance on the convertible credit line as of September 30, 2022 and December 31, 2021 amounted to $138,328 and $168,328, respectively.

------

Senior Secured Convertible Notes Payable

On February 25, 2022, the Company entered into secured senior secured convertible note for the purchase and sale of convertible promissory notes ("Convertible Note") in the principal amount of $5,000,000. The Senior Convertible Note is convertible at any time after the date of issuance into shares of the Company's common stock at a fixed conversion price of $5.00 per share. Upon conversion of the convertible note into the Company's common stock, the noteholder would be issued 1,000,000 shares of the Company's common stock. Interest on the Convertible Note shall be paid to the investors at a rate of 7.25% per annum, paid on a quarterly basis, and the maturity date of the Convertible Note is two years after the issuance date. The Convertible Note purports to be secured by certain oil and gas leases, lands, minerals and other properties of the Company, subject to prior liens and security interests. See Note 4 – Related Party Transactions. $413,206 from a related party were exchanged for a Convertible Note. Due to the variable conversion price in the convertible credit line, this fixed senior secured convertible note is treated as derivatives due to possibility of insufficient shares available at conversion to settle the notes. The day one derivative liability was $65,262, which was recorded as a discount on the senior secured convertible notes payable. During the nine months ended September 30, 2022, the Company amortized $19,401 of the discount as interest expense. As of September 30, 2022, the unamortized discount was $45,862. The outstanding principal balance on the convertible credit line as of September 30, 2022 amounted to $413,206. See discussion of derivative liability in

On February 25, 2022, Mr. Leaver assigned a $406,750 promissory note and advances of $500,000 to 20 Shekels, an affiliated Company. On the same day, the assigned promissory note and advance totaling $906,750 were transferred into a secured senior secured convertible note. The convertible note bears interest at 7.25% and matures on February 25, 2024. The note is convertible into shares of the Company at $5.00 per share. Due to the variable convertible credit line, this fixed senior secured convertible note are treated as derivatives due to possibility of insufficient shares available at conversion to settle the notes. The day one derivative liability was $143,214, which was recorded as a discount on the senior secured convertible notes payable. During the nine months ended September 30, 2022, the Company amortized $42,572 of the discount as interest expense. As of September 30, 2022, the unamortized discount was $100,642. The outstanding principal balance on the convertible credit line as of September 30, 2022 amounted to $906,754. See discussion of derivative liability in Note 8 – Derivative Liability.

As of September 30, 2022, the senior secured convertible notes payable balance, net of discount was $1,173,456 with accrued interest of $8,878.

------

Schedule 3(r) <u>Equity Capitalization</u>

See Schedule 3(q).

Schedule 3(s) <u>Indebtedness and Other Contracts</u>

See Schedule 3(q).

Schedule 3(t) <u>Absence of Litigation</u>

None.

Schedule 3(x) <u>Intellectual Property Rights</u>

The Company is aware of the existence of an Oklahoma corporation named Alpha Energy, Inc. which purports to be engaged in providing support services for the oil and gas industry. The Company has not relation to such entity.

Schedule 3(z) <u>Subsidiary Rights</u>

None.

Schedule 3(dd) Ranking of Notes

Parri passu with 7.25% Senior Secured Convertible Notes.

## Exhibit 10.5

**Exhibit 10.5**

**SENIOR SECURED CONVERTIBLE NOTE**

**NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE 1933 ACT, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT (II) UNLESS SOLD OR TRANSFERS TO A "QUALIFIED INSTITUTIONAL BUYER" WITHIN THE MEANING OF RULE 144A UNDER THE 1933 ACT OR TO AN "ACCREDITED INVESTOR" AS THAT TERM IS DEFINED IN RULE 501(A) OF REGULATION D OR (III) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 18(a) HEREOF. THE HOLDER OF THIS NOTE AGREES TO THE TERMS AND PROVISIONS SET FORTH IN SECTION 4(o) OF THE SECURITIES PURCHASE AGREEMENT REGARDING THE COLLATERAL AGENT (AS DEFINED IN THE SECURITIES PURCHASE AGREEMENT). THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.**

**Alpha Energy, Inc.**

**Senior Secured Convertible Note**

---

| | |
|:---|:---|
| Issuance Date: December 31, 2022 | Original Principal Amount: $906,754.00 |

---

**FOR VALUE RECEIVED,** Alpha Energy, Inc., a Colorado corporation (the "**Company**"), hereby promises to pay to the order of 20 Shekels, Inc. or registered assigns ("**Holder**") the amount set out above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the "**Principal**") when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest ("**Interest**") on any outstanding Principal at the applicable Interest Rate, from the date set out above as the Issuance Date (the "**Issuance Date**") until the same becomes due and payable, whether upon an Interest Date (as defined below) or the Maturity Date, acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Senior Secured Convertible Note (including all Senior Secured Convertible Notes issued in exchange, transfer or replacement hereof, this "**Note**") is one of an issue of Senior Secured Convertible Notes issued pursuant to the Securities Purchase Agreement (as defined below) on the Closing Date (collectively, the "**Notes**" and such other Senior Secured Convertible Notes, the "**Other Notes**"). Certain capitalized terms used herein are defined in Section 28.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) <u>PAYMENTS OF PRINCIPAL</u>. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal, accrued and unpaid Interest and accrued and unpaid Late Charges, if any, on such Principal and Interest. The "**Maturity Date**" shall be December 31, 2024, as may be extended at the option of the Holder (i) in the event that, and for so long as, an Event of Default (as defined in Section 4(a)) shall have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1) or any event that shall have occurred and be continuing that with the passage of time and the failure to cure would result in an Event of Default and (ii) through the date that is ten (10) Business Days after the consummation of a Change of Control in the event that a Change of Control is publicly announced or a Change of Control Notice (as defined in Section 5(b)) is delivered prior to the Maturity Date. Other than as specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal, accrued and unpaid Interest or accrued and unpaid Late Charges on Principal and Interest, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) <u>INTEREST; INTEREST RATE</u>. Interest on this Note shall commence accruing on the Issuance Date and shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months and shall be payable in arrears for each Calendar Quarter on the first (1<sup>st</sup>) day of the succeeding Calendar Quarter during the period beginning on the Issuance Date and ending on, and including, the Maturity Date (each, an "**Interest Date**") with the first Interest Date being March 31, 2023. Interest shall be payable on each Interest Date, to the record holder of this Note on the applicable Interest Date, in cash. Prior to the payment of Interest on an Interest Date, Interest on this Note shall accrue at the Interest Rate and be payable by way of inclusion of the Interest in the Conversion Amount in accordance with Section 3(b)(i). From and after the occurrence and during the continuance of an Event of Default, the Interest Rate shall be increased to fifteen percent (15.0%) per annum. In the event that such Event of Default is subsequently cured, the adjustment referred to in the preceding sentence shall cease to be effective as of the date of such cure; provided that the Interest as calculated and unpaid at such increased rate during the continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence of such Event of Default through and including the date of cure of such Event of Default.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) <u>CONVERSION OF NOTES</u>. This Note shall be convertible into shares of the Company's common stock, par value $0.001 per share (the "**Common Stock**"), on the terms and conditions set forth in this Section 3.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Conversion Right</u>. Subject to the provisions of Section 3(d), at any time or times on or after the Issuance Date, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below). The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Conversion Rate</u>. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the "**Conversion Rate**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) "**Conversion Amount**" means the sum of (A) the portion of the Principal to be converted, redeemed or otherwise with respect to which this determination is being made, (B) accrued and unpaid Interest with respect to such Principal, and (C) accrued and unpaid Late Charges with respect to such Principal and Interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) "**Conversion Price**" means, as of any Conversion Date (as defined below) or other date of determination, $5.00 per share, subject to adjustment as provided herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Mechanics of Conversion</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Optional Conversion</u>. To convert any Conversion Amount into shares of Common Stock on any date (a "**Conversion Date**"), the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice of conversion in the form attached hereto as <u>Exhibit I</u> (the "**Conversion Notice**") to the Company and (B) if required by Section 3(c)(iii), surrender this Note to a common carrier for delivery to the Company as soon as practicable on or following such date (or an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction). On or before the first (1<sup>st</sup>) Business Day following the date of receipt of a Conversion Notice, the Company shall transmit by facsimile a confirmation (the "**Conversion Confirmation**") of receipt of such Conversion Notice to the Holder and the Company's transfer agent (the "**Transfer Agent**"). On or before the (2<sup>nd</sup>) second Business Day following the date of receipt of a Conversion Notice (the "**Share Delivery Date**"), the Company shall (X) provided that the Transfer Agent is participating in the Depository Trust Company's ("**DTC**") Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock (including any Interest Shares) to which the Holder shall be entitled to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock (including any Interest Shares) to which the Holder shall be entitled. If this Note is physically surrendered for conversion as required by Section 3(c)(iii) and the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the holder a new Note (in accordance with Section 18(d)) representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Company's Failure to Timely Convert</u>. If the Company shall fail to issue a certificate to the Holder or credit the Holder's balance account with DTC, as applicable, for the number of shares of Common Stock to which the Holder is entitled upon conversion of any Conversion Amount on or prior to the date which is three (3) Trading Days after the Conversion Date (a "**Conversion Failure**"), then (A) the Company shall pay damages to the Holder for each Trading Day of such Conversion Failure in an amount equal to 1.5% of the product of (I) the sum of the number of shares of Common Stock not issued to the Holder on or prior to the Share Delivery Date and to which the Holder is entitled, and (II) the Closing Sale Price of the Common Stock on the Share Delivery Date and (B) the Holder, upon written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned, as the case may be, any portion of this Note that has not been converted pursuant to such Conversion Notice; <u>provided</u> that the voiding of a Conversion Notice shall not affect the Company's obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 3(c)(ii) or otherwise. In addition to the foregoing, if within three (3) Trading Days after the Company's receipt of the facsimile copy of a Conversion Notice the Company shall fail to issue and deliver a certificate to the Holder or credit the Holder's balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such holder's conversion of any Conversion Amount, and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company (a "**Buy-In**") or on any date of the Company's obligation to deliver shares of Common Stock as contemplated pursuant to clause (B) below, then the Company shall, within three (3) Business Days after the Holder's request and in the Holder's discretion, either (A) pay cash to the Holder in an amount equal to the Holder's total purchase price (including brokerage commissions and other out of pocket expenses, if any) for the shares of Common Stock so purchased (the **"Buy-In Price"**), at which point the Company's obligation to issue and deliver such certificate or to credit the Holder's balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such Holder's conversion of any Conversion Amount shall terminate, or (B) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (1) such number of shares of Common Stock, times (2) the Closing Bid Price on the Conversion Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Registration; Book-Entry</u>. The Company shall maintain a register (the "**Register**") for the recordation of the names and addresses of the holders of each Note and the principal amount of the Notes held by such holders (the "**Registered Notes**"). The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Company and the holders of the Notes shall treat each Person whose name is recorded in the Register as the owner of a Note for all purposes, including, without limitation, the right to receive payments of Principal and Interest hereunder, notwithstanding notice to the contrary. A Registered Note may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register. Upon its receipt of a request to assign or sell all or part of any Registered Note by a Holder, the Company shall record the information contained therein in the Register and issue one or more new Registered Notes in the same aggregate principal amount as the principal amount of the surrendered Registered Note to the designated assignee or transferee pursuant to Section 18. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount represented by this Note is being converted or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder and the Company shall maintain records showing the Principal, Interest and Late Charges, if any, converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Pro Rata Conversion; Disputes</u>. In the event that the Company receives a Conversion Notice from more than one holder of Notes for the same Conversion Date and the Company can convert some, but not all, of such portions of the Notes submitted for conversion, the Company, subject to Section 3(d), shall convert from each holder of Notes electing to have Notes converted on such date a pro rata amount of such holder's portion of its Notes submitted for conversion based on the principal amount of Notes submitted for conversion on such date by such holder relative to the aggregate principal amount of all Notes submitted for conversion on such date. In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection with a conversion of this Note, the Company shall issue to the Holder the number of shares of Common Stock not in dispute and resolve such dispute in accordance with Section 23.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Limitations on Conversions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Beneficial Ownership</u>. The Company shall not effect any conversion of this Note, and the Holder of this Note shall not have the right to convert any portion of this Note pursuant to Section 3(a), to the extent that after giving effect to such conversion, the Holder (together with the Holder's affiliates) would beneficially own in excess of 4.99% (the "**Maximum Percentage**") of the number of shares of Common Stock outstanding immediately after giving effect to such conversion. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion of this Note with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) conversion of the remaining, nonconverted portion of this Note beneficially owned by the Holder or any of its affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any Other Notes or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 3(d)(i), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "**1934 Act**"). For purposes of this Section 3(d)(i), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company's most recent Form 10-K, Form 10-Q, Form 8-K or other public filing with the Securities Exchange Commission, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. By written notice to the Company, the Holder may increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% specified in such notice; provided that (i) any such increase will not be effective until the sixty-first (61<sup>st</sup>) day after such notice is delivered to the Company, and (ii) any such increase or decrease will apply only to the Holder and not to any other holder of Notes.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Principal Market Regulation</u>. The Company shall not be obligated to issue any shares of Common Stock upon conversion of this Note if the issuance of such shares of Common Stock would exceed the aggregate number of shares of Common Stock which the Company may issue upon conversion or exercise, as applicable, of the Notes without breaching the Company's obligations under the rules or regulations of any applicable Eligible Market (the "**Exchange Cap**"), except that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable rules of such Eligible Market for issuances of Common Stock in excess of such amount or (B) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the Required Holders. Until such approval or written opinion is obtained, no purchaser of the Notes pursuant to the Securities Purchase Agreement (each, a "**Purchaser**" and collectively the "**Purchasers**") shall be issued in the aggregate, upon conversion or exercise or otherwise, as applicable, of Notes, shares of Common Stock in an amount greater than the product of the Exchange Cap multiplied by a fraction, the numerator of which is the principal amount of Notes issued to any Purchaser pursuant to the Securities Purchase Agreement on the Closing Date and the denominator of which is the aggregate principal amount of all Notes issued to all of the Purchasers pursuant to the Securities Purchase Agreement on the Closing Date (with respect to each Purchaser, the "**Exchange Cap Allocation**"). In the event that any Purchaser shall sell or otherwise transfer any of such Purchaser's Notes, the transferee shall be allocated a pro rata portion of such Purchaser's Exchange Cap Allocation, and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation allocated to such transferee. In the event that any holder of Notes shall convert all of such holder's Notes into a number of shares of Common Stock which, in the aggregate, is less than such holder's Exchange Cap Allocation, then the difference between such holder's Exchange Cap Allocation and the number of shares of Common Stock actually issued to such holder shall be allocated to the respective Exchange Cap Allocations of the remaining holders of Notes on a pro rata basis in proportion to the aggregate principal amount of the Notes then held by each such holder.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) <u>RIGHTS UPON EVENT OF DEFAULT</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Event of Default</u>. Each of the following events shall constitute an "**Event of Default**":

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Intentionally omitted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the suspension from trading or failure of the Common Stock to be listed on an Eligible Market for a period of five (5) consecutive Trading Days or for more than an aggregate of ten (10) Trading Days in any 365-day period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the Company's (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within ten (10) Business Days after the applicable Conversion Date or (B) notice, written or oral, to any holder of the Notes, including by way of public announcement or through any of its agents, at any time, of its intention not to comply with a request for conversion of any Notes into shares of Common Stock that is tendered in accordance with the provisions of the Notes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) at any time following the tenth (10<sup>th</sup>) consecutive Business Day that the Holder's Authorized Share Allocation is less than the number of shares of Common Stock that the Holder would be entitled to receive upon a conversion of the full Conversion Amount of this Note (without regard to any limitations on conversion set forth in Section 3(d) or otherwise);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) the Company's failure to pay to the Holder any amount of Principal, Interest, Late Charges or other amounts when and as due under this Note (including, without limitation, the Company's failure to pay any redemption payments or amounts hereunder) or any other Transaction Document (as defined in the Securities Purchase Agreement) or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby to which the Holder is a party, except, in the case of a failure to pay Interest and Late Charges when and as due, in which case only if such failure continues for a period of at least five (5) Business Days;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) any default under, redemption of or acceleration prior to maturity of any Indebtedness of the Company or any of its Subsidiaries (as defined in Section 3(a) of the Securities Purchase Agreement) other than with respect to any Other Notes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) the Company or any of its Subsidiaries, pursuant to or within the meaning of Title 11, U.S. Code, or any similar Federal, foreign or state law for the relief of debtors (collectively, "**Bankruptcy Law**"), (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a receiver, trustee, assignee, liquidator or similar official (a "**Custodian**"), (D) makes a general assignment for the benefit of its creditors or (E) admits in writing that it is generally unable to pay its debts as they become due;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (A) is for relief against the Company or any of its Subsidiaries in an involuntary case, (B) appoints a Custodian of the Company or any of its Subsidiaries or (C) orders the liquidation of the Company or any of its Subsidiaries;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) a final judgment or judgments for the payment of money aggregating in excess of (A) $500,000 are rendered against the Company or any of its Subsidiaries or (B) $250,000 are rendered against any of the officers or directors of the Company or any of its Subsidiaries, and which judgments are not, within sixty (60) days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within sixty (60) days after the expiration of such stay; provided, however, that any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the amounts set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance of such judgment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) the Company breaches any representation, warranty, covenant or other term or condition of any Transaction Document, except, in the case of a breach of a covenant or other term or condition of any Transaction Document which is curable, only if such breach continues for a period of at least ten (10) consecutive Business Days;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) any breach or failure in any respect to comply with Section 14 of this Note;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) the Company or any Subsidiary shall fail to perform or comply with any covenant or agreement contained in any Security Agreement to which it is a party or any Pledge Agreement to which it is a party;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) any material provision of any Security Document (as determined by the Collateral Agent) shall at any time for any reason (other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against the Company or any Subsidiary intended to be a party thereto, or the validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall be commenced by the Company or any Subsidiary or any governmental authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or the Company or any Subsidiary shall deny in writing that it has any liability or obligation purported to be created under any Security Document;**** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) any Security Agreement, or any other security document, after delivery thereof pursuant hereto, shall for any reason fail or cease to create a valid and perfected and, except to the extent permitted by the terms hereof or thereof, first priority Lien in favor of the Collateral Agent for the benefit of the holders of the Notes on any Collateral (as defined in the Security Documents) purported to be covered thereby;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv) any bank at which any deposit account, blocked account, or lockbox account of the Company or any Subsidiary is maintained shall fail to comply with any material term of any deposit account, blocked account, lockbox account or similar agreement to which such bank is a party or any securities intermediary, commodity intermediary or other financial institution at any time in custody, control or possession of any investment property of the Company or any Subsidiary shall fail to comply with any of the terms of any investment property control agreement to which such Person is a party (it being understood that only accounts pursuant to which the Collateral Agent has requested account control agreements should be subject to this clause (xv));

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi) any material damage to, or loss, theft or destruction of, any Collateral, whether or not insured, or any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than fifteen (15) consecutive days, the cessation or substantial curtailment of revenue producing activities at any facility of the Company or any Subsidiary, if any such event or circumstance could reasonably be expected to have a Material Adverse Effect (as defined in the Securities Purchase Agreement); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvii) any Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Intentionally omitted.</u> .

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) <u>RIGHTS UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Assumption</u>. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this Section 5(a) pursuant to written agreements in form and substance satisfactory to the Required Holders and approved by the Required Holders prior to such Fundamental Transaction, including agreements to deliver to each holder of Notes in exchange for such Notes a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Notes, including, without limitation, having a principal amount and interest rate equal to the principal amounts then outstanding and the interest rates of the Notes held by such holder, having similar conversion rights as the Notes and having similar ranking to the Notes, and satisfactory to the Required Holders and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note referring to the "Company" shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of the Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon conversion or redemption of this Note at any time after the consummation of the Fundamental Transaction, in lieu of the shares of the Company's Common Stock (or other securities, cash, assets or other property) issuable upon the conversion or redemption of the Notes prior to such Fundamental Transaction, such shares of the publicly traded common stock (or their equivalent) of the Successor Entity (including its Parent Entity), as adjusted in accordance with the provisions of this Note. The provisions of this Section shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any limitations on the conversion or redemption of this Note.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) <u>RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Purchase Rights</u>. If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the "**Purchase Rights**"), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this Note) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Other Corporate Events</u>. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a "**Corporate Event**"), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Note, at the Holder's option, (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Required Holders. The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) <u>INTENTIONALLY OMITTED.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) <u>SECURITY</u>. This Note and the Other Notes are secured to the extent and in the manner set forth in the Security Documents (as defined in the Securities Purchase Agreement).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) <u>NONCIRCUMVENTION</u>. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the rights of the Holder of this Note.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) <u>RESERVATION OF AUTHORIZED SHARES</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Reservation</u>. The Company shall initially reserve out of its authorized and unissued Common Stock a number of shares of Common Stock for each of the Notes equal to 100% of the Conversion Rate with respect to the Conversion Amount of each such Note as of the Issuance Date. So long as any of the Notes are outstanding, the Company shall take all action necessary to reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Notes, 130% of the number of shares of Common Stock as shall from time to time be necessary to effect the conversion of all of the Notes then outstanding; provided that at no time shall the number of shares of Common Stock so reserved be less than the number of shares required to be reserved by the previous sentence (without regard to any limitations on conversions) (the "**Required Reserve Amount**"). The initial number of shares of Common Stock reserved for conversions of the Notes and each increase in the number of shares so reserved shall be allocated pro rata among the holders of the Notes based on the principal amount of the Notes held by each holder at the Closing (as defined in the Securities Purchase Agreement) or increase in the number of reserved shares, as the case may be (the "**Authorized Share Allocation**"). In the event that a holder shall sell or otherwise transfer any of such holder's Notes, each transferee shall be allocated a pro rata portion of such holder's Authorized Share Allocation. Any shares of Common Stock reserved and allocated to any Person which ceases to hold any Notes shall be allocated to the remaining holders of Notes, pro rata based on the principal amount of the Notes then held by such holders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Insufficient Authorized Shares</u>. If at any time while any of the Notes remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Notes at least a number of shares of Common Stock equal to the Required Reserve Amount (an "**Authorized Share Failure**"), then the Company shall immediately take all action necessary to increase the Company's authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Notes then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders' approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) <u>INTENTIONALLY OMITTED.</u> 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) <u>VOTING RIGHTS</u>. The Holder shall have no voting rights as the holder of this Note, except as required by law, including, but not limited to, the general corporate laws of the State of Colorado and as expressly provided in this Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) <u>COVENANTS</u>. So long as this Note is outstanding:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Rank</u>.All payments due under this Note (A) shall rank *pari passu* with all Other Notes and (B) shall be senior to all other Indebtedness of the Company and its Subsidiaries.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Incurrence of Indebtedness</u>. The Company shall not, and the Company shall not permit any of its Subsidiaries to, directly or indirectly, incur or guarantee, assume or suffer to exist any Indebtedness, other than (i) the Indebtedness evidenced by this Note and the Other Notes and (ii) other Permitted Indebtedness.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Existence of Liens</u>. The Company shall not, and the Company shall not permit any of its Subsidiaries to, directly or indirectly, allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by the Company or any of its Subsidiaries (collectively, "**Liens**") other than Permitted Liens.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Restricted Payments</u>. The Company shall not, and the Company shall not permit any of its Subsidiaries to, directly or indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness (other than this Note and the Other Notes), whether by way of payment in respect of principal of (or premium, if any) or interest on such Indebtedness, if at the time such payment is due or is otherwise made or, after giving effect to such payment, an event constituting, or that with the passage of time and without being cured would constitute, an Event of Default has occurred and is continuing; provided that notwithstanding the foregoing, no principal (or any portion thereof) of any Subordinated Indebtedness may be paid (whether upon maturity, redemption, acceleration or otherwise) so long as this Note is outstanding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Restriction on Redemption and Cash Dividends</u>. Until all of the Notes have been converted, or otherwise satisfied in accordance with their terms, the Company shall not, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on its capital stock without the prior express written consent of the Required Holders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Intentionally omitted.</u> 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Change in Collateral; Collateral Records</u>. The Company shall (i) give the Collateral Agent (as defined in the Securities Purchase Agreement) not less than thirty (30) days' prior written notice of any change in the location of any Collateral (as defined in the Security Documents (as defined in the Securities Purchase Agreement)), and with respect to which the Collateral Agent has filed financing statements and otherwise fully perfected its Liens thereon, (ii) advise the Collateral Agent promptly, in sufficient detail, of any material adverse change relating to the type, quantity or quality of the Collateral or the Lien granted thereon and (iii) execute and deliver, and cause each of its Subsidiaries to execute and deliver, to the Collateral Agent for the benefit of the Holder and holders of the Other Notes from time to time, solely for the Collateral Agent's convenience in maintaining a record of Collateral, such written statements and schedules as the Collateral Agent may reasonably require, designating, identifying or describing the Collateral.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Transactions with Affiliates</u>. The Company shall not, nor shall it permit any of its Subsidiaries to, enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any Affiliate, except (i) in the ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm's length transaction with a Person that is not an Affiliate thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Change in Nature of Business</u>. The Company shall not make, or permit any of its Subsidiaries to make, any change in the nature of its business as described in the Company's most recent annual report filed on Form 10-K with the SEC. The Company shall not modify its corporate structure or purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Preservation of Existence, Etc.</u> The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>Maintenance of Properties, Etc.</u> The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties which are necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear and tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all leases to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>Maintenance of Insurance</u>. Upon notice from the Collateral Agent, the Company shall maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and business interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such amounts and covering such risks as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated and in any event in amount, adequacy and scope reasonably satisfactory to the Collateral Agent. All policies covering the Collateral are to be made payable to the Collateral Agent for the benefit of the Holder and the holder of the Other Notes, as its interests may appear, in case of loss, under a standard non-contributory "lender" or "secured party" clause and are to contain such other provisions as the Collateral Agent may require to fully protect the interest of the Holder and the holder of the Other Notes in the Collateral and to any payments to be made under such policies. All certificates of insurance are to be delivered to the Collateral Agent and the policies are to be premium prepaid, with the loss payable and additional insured endorsement in favor of the Collateral Agent and such other Persons as the Collateral Agent may designate from time to time, and shall provide for not less than 30 days' prior written notice to the Collateral Agent of the exercise of any right of cancellation. If the Company or any of its Subsidiaries fails to maintain such insurance, the Collateral Agent may arrange for such insurance, but at the Company's expense and without any responsibility on the Collateral Agent's part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims. Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shall have the sole right, in the name of the Holder and the holders of the Other Notes, the Company and its Subsidiaries, to file claims under any insurance policies, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(14) <u>PARTICIPATION</u>. The Holder, as the holder of this Note, shall be entitled to receive such dividends paid and distributions made to the holders of Common Stock to the same extent as if the Holder had converted this Note into Common Stock (without regard to any limitations on conversion herein or elsewhere) and had held such shares of Common Stock on the record date for such dividends and distributions. Payments under the preceding sentence shall be made concurrently with the dividend or distribution to the holders of Common Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(15) <u>VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES</u>. The affirmative vote at a meeting duly called for such purpose or the written consent without a meeting of the Required Holders shall be required for any change or amendment to this Note or the Other Notes. No consideration shall be offered or paid to any holder of Notes to amend or consent to a waiver or modification of the Notes unless the same consideration also is offered to all of the holders of Notes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(16) <u>TRANSFER</u>. This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company, subject only to the provisions of Section 2(f) of the Securities Purchase Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(17) <u>REISSUANCE OF THIS NOTE</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Transfer</u>. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 18(d)), registered as the Holder may request, representing the outstanding Principal being transferred by the Holder and, if less then the entire outstanding Principal is being transferred, a new Note (in accordance with Section 18(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(iii) following conversion or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note and it will be bound by the appointment of the Collateral Agent (as defined in the Securities Purchase Agreement) and collateral agency provisions regarding such appointment as set forth in Section 4(o) of the Securities Purchase Agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Lost, Stolen or Mutilated Note</u>. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 18(d)) representing the outstanding Principal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Note Exchangeable for Different Denominations</u>. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section 18(d)) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Issuance of New Notes</u>. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 18(a) or Section 18(c), the Principal designated by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges, if any, on the Principal and Interest of this Note from the Issuance Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(18) <u>REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF</u>. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder's right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(19) <u>PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS</u>. If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors' rights and involving a claim under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, but not limited to, financial advisory fees and attorneys' fees and disbursements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(20) <u>CONSTRUCTION; HEADINGS</u>. This Note shall be deemed to be jointly drafted by the Company and all the Purchasers and shall not be construed against any person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(21) <u>FAILURE OR INDULGENCE NOT WAIVER</u>. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(22) <u>INTENTIONALLY OMITTED.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(23) <u>NOTICES; PAYMENTS</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Notices</u>. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefore. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least twenty (20) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Payments</u>. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, such payment shall be made in lawful money of the United States of America by a check drawn on the account of the Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing (which address, in the case of each of the Purchasers, shall initially be as set forth on the Schedule of Buyers attached to the Securities Purchase Agreement); provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available funds by providing the Company with prior written notice setting out such request and the Holder's wire transfer instructions. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day and, in the case of any Interest Date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of Interest due on such date. Any amount of Principal or other amounts due under the Transaction Documents which is not paid when due shall result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate of eighteen percent (18%) per annum from the date such amount was due until the same is paid in full ("**Late Charge**").

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(24) <u>CANCELLATION</u>. After all Principal, accrued Interest and other amounts at any time owed on this Note have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(25) <u>WAIVER OF NOTICE</u>. To the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Securities Purchase Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(26) <u>GOVERNING LAW; JURISDICTION; SEVERABILITY; JURY TRIAL</u>. This Note shall be construed and enforced in accor-dance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Note. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company's obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. **THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(27) <u>CERTAIN DEFINITIONS</u>. For purposes of this Note, the following terms shall have the following meanings:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "**Business Day**" means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) "**Calendar Quarter**" means each of: the period beginning on and including January 1 and ending on and including March 31; the period beginning on and including April 1 and ending on and including June 30; the period beginning on and including July 1 and ending on and including September 30; and the period beginning on and including October 1 and ending on and including December 31.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) "**Change of Control**" means any Fundamental Transaction other than (A) any reorganization, recapitalization or reclassification of the Common Stock, in which holders of the Company's voting power immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, the voting power of the surviving entity or entities necessary to elect a majority of the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities, or (B) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company, or (C) any Fundamental Transaction in which the Holder is the Person or part of the group of Persons described in clauses (i)(A) – (D) or clause (ii) of the definition thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) "**Closing Date**" shall have the meaning set forth in the Securities Purchase Agreement which corresponds to the date this Note and the Other Notes were initially issued pursuant to the terms of the Securities Purchase Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) "**Convertible Securities**" means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for Common Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) "**Eligible Market**" means the Principal Market (OTC Pink Mkt), The New York Stock Exchange, Inc., the American Stock Exchange, The NASDAQ Global Select Market, The NASDAQ Global Market or The NASDAQ Capital Market, or any market that is a successor to any of the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) "**Fiscal Quarters**" means each of the fiscal quarters adopted by the Company for financial reporting purposes that correspond to the Company's fiscal year that ends on December 31, or such other fiscal quarter adopted by the Company for financial reporting purposes in accordance with GAAP.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) "**Fundamental Transaction**" means that (i) the Company shall, directly or indirectly, in one or more related transactions, (A) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person or Persons, if the holders of the Voting Stock (not including any shares of Voting Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such consolidation or merger) immediately prior to such consolidation or merger shall hold or have the right to direct the voting of less than 50% of the Voting Stock or such voting securities of such other surviving Person immediately following such transaction, or (B) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person, or (C) allow another Person to make a purchase, tender or exchange offer that is accepted by the holders of more than the 50% of the outstanding shares of Voting Stock (not including any shares of Voting Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (D) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than the 50% of the outstanding shares of Voting Stock (not including any shares of Voting Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination), (E) reorganize, recapitalize or reclassify its Common Stock or (ii) any "person" or "group" (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate Voting Stock of the Company.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) "**GAAP**" means United States generally accepted accounting principles, consistently applied.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) "**Indebtedness**" of any Person means, without duplication (i) all indebtedness for borrowed money, (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services, including (without limitation) "capital leases" in accordance with GAAP (other than trade payables entered into in the ordinary course of business), (iii) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (vi) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (vii) all indebtedness referred to in clauses (i) through (vi) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (viii) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (i) through (vii) above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) "**Interest Rate**" means, seven and one-quarter (7.25%) percent per annum, subject to adjustment as set forth in Section 2 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) "**Options**" means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) "**Parent Entity**" of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) "**Permitted Indebtedness**" means (i) Indebtedness incurred by the Company that is made expressly subordinate in right of payment to the Indebtedness evidenced by this Note, as reflected in a written agreement and which Indebtedness does not provide at any time for (1) the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any principal or premium, if any, thereon until ninety-one (91) days after the Maturity Date or later and (2) total interest and fees at a rate in excess of the initial Interest Rate per annum (such Indebtedness, the "**Subordinated Indebtedness**"); provided, however, that any Subordinated Indebtedness incurred in connection with the repayment of the Notes in full shall not be limited by clause (2) of the foregoing, (ii) Indebtedness secured by Permitted Liens, (iii) Indebtedness under this Note and the Other Notes, and (iv) extensions, refinancings and renewals of any items in clauses (i) through (ii) above, provided that the principal amount is not increased or the terms modified to impose more burdensome terms upon the Company or its Subsidiaries, as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) "**Person**" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) "**Principal Market**" means the OTC Pink Open Markets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) "**Required Holders**" means the holders of Notes representing at least a majority of the aggregate principal amount of the Notes then outstanding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) "**SEC**" means the United States Securities and Exchange Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) "**Subsidiary**" means any entity in which the Company, directly or indirectly, owns any of the capital stock or holds an equity or similar interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) "**Successor Entity**" means the Person, which may be the Company, formed by, resulting from or surviving any Fundamental Transaction or the Person with which such Fundamental Transaction shall have been made, provided that if such Person is not a publicly traded entity whose common stock or equivalent equity security is quoted or listed for trading on an Eligible Market, Successor Entity shall mean such Person's Parent Entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) "**Trading Day**" means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded; provided that "Trading Day" shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York Time).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) "**Voting Stock**" of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers or trustees of such Person (irrespective of whether or not at the time capital stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set out above.

---

| |
|:---|
| **ALPHA ENERGY, INC.** |
| By: |
| Name: |
| Title: |

---

------

**EXHIBIT I**<br>**ALPHA ENERGYT, INC.**

**CONVERSION NOTICE**

Reference is made to the Senior Secured Convertible Note (the "**Note**") issued to the undersigned by Alpha Energy, Inc. (the "**Company**"). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of the Note indicated below into shares of Common Stock par value $0.001 per share (the "**Common Stock**") of the Company, as of the date specified below.

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| |
|:---|
| Date of Conversion: |
| Aggregate Conversion Amount to be converted: |
| Please confirm the following information: |
| Conversion Price: |
| Number of shares of Common Stock to be issued: |
| Please issue the Common Stock into which the Note is being converted in the following name and to the following address: |
| Issue to: |
| Facsimile Number: |
| Authorization: |
| By: |
| Title: |
| Dated: |
| Account Number: |
| (if electronic book entry transfer) |
| Transaction Code Number: |
| (if electronic book entry transfer) |

---

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**ACKNOWLEDGMENT**

The Company hereby acknowledges this Conversion Notice and hereby directs **[ ]** to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _________ [●], ______ from the Company and acknowledged and agreed to by **[ ]**.

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| | |
|:---|:---|
| ALPHA ENERGY, INC. | ALPHA ENERGY, INC. |
| By: |  |
|  | Name: |
|  | Title: |

---

## Exhibit 10.6

**Exhibit 10.6**

**SENIOR SECURED CONVERTIBLE NOTE**

**NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE 1933 ACT, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT (II) UNLESS SOLD OR TRANSFERS TO A "QUALIFIED INSTITUTIONAL BUYER" WITHIN THE MEANING OF RULE 144A UNDER THE 1933 ACT OR TO AN "ACCREDITED INVESTOR" AS THAT TERM IS DEFINED IN RULE 501(A) OF REGULATION D OR (III) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 18(a) HEREOF. THE HOLDER OF THIS NOTE AGREES TO THE TERMS AND PROVISIONS SET FORTH IN SECTION 4(o) OF THE SECURITIES PURCHASE AGREEMENT REGARDING THE COLLATERAL AGENT (AS DEFINED IN THE SECURITIES PURCHASE AGREEMENT). THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.**

**Alpha Energy, Inc.**

**Senior Secured Convertible Note**

---

| | |
|:---|:---|
| Issuance Date: December 31, 2022 | Original Principal Amount: $413,206 |

---

**FOR VALUE RECEIVED,** Alpha Energy, Inc., a Colorado corporation (the "**Company**"), hereby promises to pay to the order of AEI Managment, Inc. or registered assigns ("**Holder**") the amount set out above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the "**Principal**") when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest ("**Interest**") on any outstanding Principal at the applicable Interest Rate, from the date set out above as the Issuance Date (the "**Issuance Date**") until the same becomes due and payable, whether upon an Interest Date (as defined below) or the Maturity Date, acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Senior Secured Convertible Note (including all Senior Secured Convertible Notes issued in exchange, transfer or replacement hereof, this "**Note**") is one of an issue of Senior Secured Convertible Notes issued pursuant to the Securities Purchase Agreement (as defined below) on the Closing Date (collectively, the "**Notes**" and such other Senior Secured Convertible Notes, the "**Other Notes**"). Certain capitalized terms used herein are defined in Section 28.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) <u>PAYMENTS OF PRINCIPAL</u>. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal, accrued and unpaid Interest and accrued and unpaid Late Charges, if any, on such Principal and Interest. The "**Maturity Date**" shall be December 31, 2024, as may be extended at the option of the Holder (i) in the event that, and for so long as, an Event of Default (as defined in Section 4(a)) shall have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1) or any event that shall have occurred and be continuing that with the passage of time and the failure to cure would result in an Event of Default and (ii) through the date that is ten (10) Business Days after the consummation of a Change of Control in the event that a Change of Control is publicly announced or a Change of Control Notice (as defined in Section 5(b)) is delivered prior to the Maturity Date. Other than as specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal, accrued and unpaid Interest or accrued and unpaid Late Charges on Principal and Interest, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) <u>INTEREST; INTEREST RATE</u>. Interest on this Note shall commence accruing on the Issuance Date and shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months and shall be payable in arrears for each Calendar Quarter on the first (1<sup>st</sup>) day of the succeeding Calendar Quarter during the period beginning on the Issuance Date and ending on, and including, the Maturity Date (each, an "**Interest Date**") with the first Interest Date being March 31, 2023. Interest shall be payable on each Interest Date, to the record holder of this Note on the applicable Interest Date, in cash. Prior to the payment of Interest on an Interest Date, Interest on this Note shall accrue at the Interest Rate and be payable by way of inclusion of the Interest in the Conversion Amount in accordance with Section 3(b)(i). From and after the occurrence and during the continuance of an Event of Default, the Interest Rate shall be increased to fifteen percent (15.0%) per annum. In the event that such Event of Default is subsequently cured, the adjustment referred to in the preceding sentence shall cease to be effective as of the date of such cure; provided that the Interest as calculated and unpaid at such increased rate during the continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence of such Event of Default through and including the date of cure of such Event of Default.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) <u>CONVERSION OF NOTES</u>. This Note shall be convertible into shares of the Company's common stock, par value $0.001 per share (the "**Common Stock**"), on the terms and conditions set forth in this Section 3.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Conversion Right</u>. Subject to the provisions of Section 3(d), at any time or times on or after the Issuance Date, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below). The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Conversion Rate</u>. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the "**Conversion Rate**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) "**Conversion Amount**" means the sum of (A) the portion of the Principal to be converted, redeemed or otherwise with respect to which this determination is being made, (B) accrued and unpaid Interest with respect to such Principal, and (C) accrued and unpaid Late Charges with respect to such Principal and Interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) "**Conversion Price**" means, as of any Conversion Date (as defined below) or other date of determination, $5.00 per share, subject to adjustment as provided herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Mechanics of Conversion</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Optional Conversion</u>. To convert any Conversion Amount into shares of Common Stock on any date (a "**Conversion Date**"), the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice of conversion in the form attached hereto as <u>Exhibit I</u> (the "**Conversion Notice**") to the Company and (B) if required by Section 3(c)(iii), surrender this Note to a common carrier for delivery to the Company as soon as practicable on or following such date (or an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction). On or before the first (1<sup>st</sup>) Business Day following the date of receipt of a Conversion Notice, the Company shall transmit by facsimile a confirmation (the "**Conversion Confirmation**") of receipt of such Conversion Notice to the Holder and the Company's transfer agent (the "**Transfer Agent**"). On or before the (2<sup>nd</sup>) second Business Day following the date of receipt of a Conversion Notice (the "**Share Delivery Date**"), the Company shall (X) provided that the Transfer Agent is participating in the Depository Trust Company's ("**DTC**") Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock (including any Interest Shares) to which the Holder shall be entitled to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock (including any Interest Shares) to which the Holder shall be entitled. If this Note is physically surrendered for conversion as required by Section 3(c)(iii) and the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the holder a new Note (in accordance with Section 18(d)) representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Company's Failure to Timely Convert</u>. If the Company shall fail to issue a certificate to the Holder or credit the Holder's balance account with DTC, as applicable, for the number of shares of Common Stock to which the Holder is entitled upon conversion of any Conversion Amount on or prior to the date which is three (3) Trading Days after the Conversion Date (a "**Conversion Failure**"), then (A) the Company shall pay damages to the Holder for each Trading Day of such Conversion Failure in an amount equal to 1.5% of the product of (I) the sum of the number of shares of Common Stock not issued to the Holder on or prior to the Share Delivery Date and to which the Holder is entitled, and (II) the Closing Sale Price of the Common Stock on the Share Delivery Date and (B) the Holder, upon written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned, as the case may be, any portion of this Note that has not been converted pursuant to such Conversion Notice; <u>provided</u> that the voiding of a Conversion Notice shall not affect the Company's obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 3(c)(ii) or otherwise. In addition to the foregoing, if within three (3) Trading Days after the Company's receipt of the facsimile copy of a Conversion Notice the Company shall fail to issue and deliver a certificate to the Holder or credit the Holder's balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such holder's conversion of any Conversion Amount, and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company (a "**Buy-In**") or on any date of the Company's obligation to deliver shares of Common Stock as contemplated pursuant to clause (B) below, then the Company shall, within three (3) Business Days after the Holder's request and in the Holder's discretion, either (A) pay cash to the Holder in an amount equal to the Holder's total purchase price (including brokerage commissions and other out of pocket expenses, if any) for the shares of Common Stock so purchased (the **"Buy-In Price"**), at which point the Company's obligation to issue and deliver such certificate or to credit the Holder's balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such Holder's conversion of any Conversion Amount shall terminate, or (B) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (1) such number of shares of Common Stock, times (2) the Closing Bid Price on the Conversion Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Registration; Book-Entry</u>. The Company shall maintain a register (the "**Register**") for the recordation of the names and addresses of the holders of each Note and the principal amount of the Notes held by such holders (the "**Registered Notes**"). The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Company and the holders of the Notes shall treat each Person whose name is recorded in the Register as the owner of a Note for all purposes, including, without limitation, the right to receive payments of Principal and Interest hereunder, notwithstanding notice to the contrary. A Registered Note may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register. Upon its receipt of a request to assign or sell all or part of any Registered Note by a Holder, the Company shall record the information contained therein in the Register and issue one or more new Registered Notes in the same aggregate principal amount as the principal amount of the surrendered Registered Note to the designated assignee or transferee pursuant to Section 18. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount represented by this Note is being converted or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder and the Company shall maintain records showing the Principal, Interest and Late Charges, if any, converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Pro Rata Conversion; Disputes</u>. In the event that the Company receives a Conversion Notice from more than one holder of Notes for the same Conversion Date and the Company can convert some, but not all, of such portions of the Notes submitted for conversion, the Company, subject to Section 3(d), shall convert from each holder of Notes electing to have Notes converted on such date a pro rata amount of such holder's portion of its Notes submitted for conversion based on the principal amount of Notes submitted for conversion on such date by such holder relative to the aggregate principal amount of all Notes submitted for conversion on such date. In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection with a conversion of this Note, the Company shall issue to the Holder the number of shares of Common Stock not in dispute and resolve such dispute in accordance with Section 23.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Limitations on Conversions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Beneficial Ownership</u>. The Company shall not effect any conversion of this Note, and the Holder of this Note shall not have the right to convert any portion of this Note pursuant to Section 3(a), to the extent that after giving effect to such conversion, the Holder (together with the Holder's affiliates) would beneficially own in excess of 4.99% (the "**Maximum Percentage**") of the number of shares of Common Stock outstanding immediately after giving effect to such conversion. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion of this Note with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) conversion of the remaining, nonconverted portion of this Note beneficially owned by the Holder or any of its affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any Other Notes or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 3(d)(i), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "**1934 Act**"). For purposes of this Section 3(d)(i), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company's most recent Form 10-K, Form 10-Q, Form 8-K or other public filing with the Securities Exchange Commission, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. By written notice to the Company, the Holder may increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% specified in such notice; provided that (i) any such increase will not be effective until the sixty-first (61<sup>st</sup>) day after such notice is delivered to the Company, and (ii) any such increase or decrease will apply only to the Holder and not to any other holder of Notes.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Principal Market Regulation</u>. The Company shall not be obligated to issue any shares of Common Stock upon conversion of this Note if the issuance of such shares of Common Stock would exceed the aggregate number of shares of Common Stock which the Company may issue upon conversion or exercise, as applicable, of the Notes without breaching the Company's obligations under the rules or regulations of any applicable Eligible Market (the "**Exchange Cap**"), except that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable rules of such Eligible Market for issuances of Common Stock in excess of such amount or (B) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the Required Holders. Until such approval or written opinion is obtained, no purchaser of the Notes pursuant to the Securities Purchase Agreement (each, a "**Purchaser**" and collectively the "**Purchasers**") shall be issued in the aggregate, upon conversion or exercise or otherwise, as applicable, of Notes, shares of Common Stock in an amount greater than the product of the Exchange Cap multiplied by a fraction, the numerator of which is the principal amount of Notes issued to any Purchaser pursuant to the Securities Purchase Agreement on the Closing Date and the denominator of which is the aggregate principal amount of all Notes issued to all of the Purchasers pursuant to the Securities Purchase Agreement on the Closing Date (with respect to each Purchaser, the "**Exchange Cap Allocation**"). In the event that any Purchaser shall sell or otherwise transfer any of such Purchaser's Notes, the transferee shall be allocated a pro rata portion of such Purchaser's Exchange Cap Allocation, and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation allocated to such transferee. In the event that any holder of Notes shall convert all of such holder's Notes into a number of shares of Common Stock which, in the aggregate, is less than such holder's Exchange Cap Allocation, then the difference between such holder's Exchange Cap Allocation and the number of shares of Common Stock actually issued to such holder shall be allocated to the respective Exchange Cap Allocations of the remaining holders of Notes on a pro rata basis in proportion to the aggregate principal amount of the Notes then held by each such holder.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) <u>RIGHTS UPON EVENT OF DEFAULT</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Event of Default</u>. Each of the following events shall constitute an "**Event of Default**":

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Intentionally omitted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the suspension from trading or failure of the Common Stock to be listed on an Eligible Market for a period of five (5) consecutive Trading Days or for more than an aggregate of ten (10) Trading Days in any 365-day period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the Company's (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within ten (10) Business Days after the applicable Conversion Date or (B) notice, written or oral, to any holder of the Notes, including by way of public announcement or through any of its agents, at any time, of its intention not to comply with a request for conversion of any Notes into shares of Common Stock that is tendered in accordance with the provisions of the Notes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) at any time following the tenth (10<sup>th</sup>) consecutive Business Day that the Holder's Authorized Share Allocation is less than the number of shares of Common Stock that the Holder would be entitled to receive upon a conversion of the full Conversion Amount of this Note (without regard to any limitations on conversion set forth in Section 3(d) or otherwise);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) the Company's failure to pay to the Holder any amount of Principal, Interest, Late Charges or other amounts when and as due under this Note (including, without limitation, the Company's failure to pay any redemption payments or amounts hereunder) or any other Transaction Document (as defined in the Securities Purchase Agreement) or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby to which the Holder is a party, except, in the case of a failure to pay Interest and Late Charges when and as due, in which case only if such failure continues for a period of at least five (5) Business Days;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) any default under, redemption of or acceleration prior to maturity of any Indebtedness of the Company or any of its Subsidiaries (as defined in Section 3(a) of the Securities Purchase Agreement) other than with respect to any Other Notes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) the Company or any of its Subsidiaries, pursuant to or within the meaning of Title 11, U.S. Code, or any similar Federal, foreign or state law for the relief of debtors (collectively, "**Bankruptcy Law**"), (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a receiver, trustee, assignee, liquidator or similar official (a "**Custodian**"), (D) makes a general assignment for the benefit of its creditors or (E) admits in writing that it is generally unable to pay its debts as they become due;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (A) is for relief against the Company or any of its Subsidiaries in an involuntary case, (B) appoints a Custodian of the Company or any of its Subsidiaries or (C) orders the liquidation of the Company or any of its Subsidiaries;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) a final judgment or judgments for the payment of money aggregating in excess of (A) $500,000 are rendered against the Company or any of its Subsidiaries or (B) $250,000 are rendered against any of the officers or directors of the Company or any of its Subsidiaries, and which judgments are not, within sixty (60) days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within sixty (60) days after the expiration of such stay; provided, however, that any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the amounts set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance of such judgment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) the Company breaches any representation, warranty, covenant or other term or condition of any Transaction Document, except, in the case of a breach of a covenant or other term or condition of any Transaction Document which is curable, only if such breach continues for a period of at least ten (10) consecutive Business Days;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) any breach or failure in any respect to comply with Section 14 of this Note;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) the Company or any Subsidiary shall fail to perform or comply with any covenant or agreement contained in any Security Agreement to which it is a party or any Pledge Agreement to which it is a party;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) any material provision of any Security Document (as determined by the Collateral Agent) shall at any time for any reason (other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against the Company or any Subsidiary intended to be a party thereto, or the validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall be commenced by the Company or any Subsidiary or any governmental authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or the Company or any Subsidiary shall deny in writing that it has any liability or obligation purported to be created under any Security Document;**** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) any Security Agreement, or any other security document, after delivery thereof pursuant hereto, shall for any reason fail or cease to create a valid and perfected and, except to the extent permitted by the terms hereof or thereof, first priority Lien in favor of the Collateral Agent for the benefit of the holders of the Notes on any Collateral (as defined in the Security Documents) purported to be covered thereby;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv) any bank at which any deposit account, blocked account, or lockbox account of the Company or any Subsidiary is maintained shall fail to comply with any material term of any deposit account, blocked account, lockbox account or similar agreement to which such bank is a party or any securities intermediary, commodity intermediary or other financial institution at any time in custody, control or possession of any investment property of the Company or any Subsidiary shall fail to comply with any of the terms of any investment property control agreement to which such Person is a party (it being understood that only accounts pursuant to which the Collateral Agent has requested account control agreements should be subject to this clause (xv));

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi) any material damage to, or loss, theft or destruction of, any Collateral, whether or not insured, or any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than fifteen (15) consecutive days, the cessation or substantial curtailment of revenue producing activities at any facility of the Company or any Subsidiary, if any such event or circumstance could reasonably be expected to have a Material Adverse Effect (as defined in the Securities Purchase Agreement); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvii) any Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Intentionally omitted.</u> .

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) <u>RIGHTS UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Assumption</u>. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this Section 5(a) pursuant to written agreements in form and substance satisfactory to the Required Holders and approved by the Required Holders prior to such Fundamental Transaction, including agreements to deliver to each holder of Notes in exchange for such Notes a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Notes, including, without limitation, having a principal amount and interest rate equal to the principal amounts then outstanding and the interest rates of the Notes held by such holder, having similar conversion rights as the Notes and having similar ranking to the Notes, and satisfactory to the Required Holders and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note referring to the "Company" shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of the Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon conversion or redemption of this Note at any time after the consummation of the Fundamental Transaction, in lieu of the shares of the Company's Common Stock (or other securities, cash, assets or other property) issuable upon the conversion or redemption of the Notes prior to such Fundamental Transaction, such shares of the publicly traded common stock (or their equivalent) of the Successor Entity (including its Parent Entity), as adjusted in accordance with the provisions of this Note. The provisions of this Section shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any limitations on the conversion or redemption of this Note.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) <u>RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Purchase Rights</u>. If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the "**Purchase Rights**"), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this Note) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Other Corporate Events</u>. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a "**Corporate Event**"), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Note, at the Holder's option, (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Required Holders. The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) <u>INTENTIONALLY OMITTED.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) <u>SECURITY</u>. This Note and the Other Notes are secured to the extent and in the manner set forth in the Security Documents (as defined in the Securities Purchase Agreement).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) <u>NONCIRCUMVENTION</u>. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the rights of the Holder of this Note.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) <u>RESERVATION OF AUTHORIZED SHARES</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Reservation</u>. The Company shall initially reserve out of its authorized and unissued Common Stock a number of shares of Common Stock for each of the Notes equal to 100% of the Conversion Rate with respect to the Conversion Amount of each such Note as of the Issuance Date. So long as any of the Notes are outstanding, the Company shall take all action necessary to reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Notes, 130% of the number of shares of Common Stock as shall from time to time be necessary to effect the conversion of all of the Notes then outstanding; provided that at no time shall the number of shares of Common Stock so reserved be less than the number of shares required to be reserved by the previous sentence (without regard to any limitations on conversions) (the "**Required Reserve Amount**"). The initial number of shares of Common Stock reserved for conversions of the Notes and each increase in the number of shares so reserved shall be allocated pro rata among the holders of the Notes based on the principal amount of the Notes held by each holder at the Closing (as defined in the Securities Purchase Agreement) or increase in the number of reserved shares, as the case may be (the "**Authorized Share Allocation**"). In the event that a holder shall sell or otherwise transfer any of such holder's Notes, each transferee shall be allocated a pro rata portion of such holder's Authorized Share Allocation. Any shares of Common Stock reserved and allocated to any Person which ceases to hold any Notes shall be allocated to the remaining holders of Notes, pro rata based on the principal amount of the Notes then held by such holders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Insufficient Authorized Shares</u>. If at any time while any of the Notes remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Notes at least a number of shares of Common Stock equal to the Required Reserve Amount (an "**Authorized Share Failure**"), then the Company shall immediately take all action necessary to increase the Company's authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Notes then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders' approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) <u>INTENTIONALLY OMITTED.</u> 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) <u>VOTING RIGHTS</u>. The Holder shall have no voting rights as the holder of this Note, except as required by law, including, but not limited to, the general corporate laws of the State of Colorado and as expressly provided in this Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) <u>COVENANTS</u>. So long as this Note is outstanding:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Rank</u>.All payments due under this Note (A) shall rank *pari passu* with all Other Notes and (B) shall be senior to all other Indebtedness of the Company and its Subsidiaries.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Incurrence of Indebtedness</u>. The Company shall not, and the Company shall not permit any of its Subsidiaries to, directly or indirectly, incur or guarantee, assume or suffer to exist any Indebtedness, other than (i) the Indebtedness evidenced by this Note and the Other Notes and (ii) other Permitted Indebtedness.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Existence of Liens</u>. The Company shall not, and the Company shall not permit any of its Subsidiaries to, directly or indirectly, allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by the Company or any of its Subsidiaries (collectively, "**Liens**") other than Permitted Liens.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Restricted Payments</u>. The Company shall not, and the Company shall not permit any of its Subsidiaries to, directly or indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness (other than this Note and the Other Notes), whether by way of payment in respect of principal of (or premium, if any) or interest on such Indebtedness, if at the time such payment is due or is otherwise made or, after giving effect to such payment, an event constituting, or that with the passage of time and without being cured would constitute, an Event of Default has occurred and is continuing; provided that notwithstanding the foregoing, no principal (or any portion thereof) of any Subordinated Indebtedness may be paid (whether upon maturity, redemption, acceleration or otherwise) so long as this Note is outstanding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Restriction on Redemption and Cash Dividends</u>. Until all of the Notes have been converted, or otherwise satisfied in accordance with their terms, the Company shall not, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on its capital stock without the prior express written consent of the Required Holders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Intentionally omitted.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Change in Collateral; Collateral Records</u>. The Company shall (i) give the Collateral Agent (as defined in the Securities Purchase Agreement) not less than thirty (30) days' prior written notice of any change in the location of any Collateral (as defined in the Security Documents (as defined in the Securities Purchase Agreement)), and with respect to which the Collateral Agent has filed financing statements and otherwise fully perfected its Liens thereon, (ii) advise the Collateral Agent promptly, in sufficient detail, of any material adverse change relating to the type, quantity or quality of the Collateral or the Lien granted thereon and (iii) execute and deliver, and cause each of its Subsidiaries to execute and deliver, to the Collateral Agent for the benefit of the Holder and holders of the Other Notes from time to time, solely for the Collateral Agent's convenience in maintaining a record of Collateral, such written statements and schedules as the Collateral Agent may reasonably require, designating, identifying or describing the Collateral.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Transactions with Affiliates</u>. The Company shall not, nor shall it permit any of its Subsidiaries to, enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any Affiliate, except (i) in the ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm's length transaction with a Person that is not an Affiliate thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Change in Nature of Business</u>. The Company shall not make, or permit any of its Subsidiaries to make, any change in the nature of its business as described in the Company's most recent annual report filed on Form 10-K with the SEC. The Company shall not modify its corporate structure or purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Preservation of Existence, Etc.</u> The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>Maintenance of Properties, Etc.</u> The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties which are necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear and tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all leases to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>Maintenance of Insurance</u>. Upon notice from the Collateral Agent, the Company shall maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and business interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such amounts and covering such risks as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated and in any event in amount, adequacy and scope reasonably satisfactory to the Collateral Agent. All policies covering the Collateral are to be made payable to the Collateral Agent for the benefit of the Holder and the holder of the Other Notes, as its interests may appear, in case of loss, under a standard non-contributory "lender" or "secured party" clause and are to contain such other provisions as the Collateral Agent may require to fully protect the interest of the Holder and the holder of the Other Notes in the Collateral and to any payments to be made under such policies. All certificates of insurance are to be delivered to the Collateral Agent and the policies are to be premium prepaid, with the loss payable and additional insured endorsement in favor of the Collateral Agent and such other Persons as the Collateral Agent may designate from time to time, and shall provide for not less than 30 days' prior written notice to the Collateral Agent of the exercise of any right of cancellation. If the Company or any of its Subsidiaries fails to maintain such insurance, the Collateral Agent may arrange for such insurance, but at the Company's expense and without any responsibility on the Collateral Agent's part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims. Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shall have the sole right, in the name of the Holder and the holders of the Other Notes, the Company and its Subsidiaries, to file claims under any insurance policies, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(14) <u>PARTICIPATION</u>. The Holder, as the holder of this Note, shall be entitled to receive such dividends paid and distributions made to the holders of Common Stock to the same extent as if the Holder had converted this Note into Common Stock (without regard to any limitations on conversion herein or elsewhere) and had held such shares of Common Stock on the record date for such dividends and distributions. Payments under the preceding sentence shall be made concurrently with the dividend or distribution to the holders of Common Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(15) <u>VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES</u>. The affirmative vote at a meeting duly called for such purpose or the written consent without a meeting of the Required Holders shall be required for any change or amendment to this Note or the Other Notes. No consideration shall be offered or paid to any holder of Notes to amend or consent to a waiver or modification of the Notes unless the same consideration also is offered to all of the holders of Notes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(16) <u>TRANSFER</u>. This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company, subject only to the provisions of Section 2(f) of the Securities Purchase Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(17) <u>REISSUANCE OF THIS NOTE</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Transfer</u>. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 18(d)), registered as the Holder may request, representing the outstanding Principal being transferred by the Holder and, if less then the entire outstanding Principal is being transferred, a new Note (in accordance with Section 18(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(iii) following conversion or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note and it will be bound by the appointment of the Collateral Agent (as defined in the Securities Purchase Agreement) and collateral agency provisions regarding such appointment as set forth in Section 4(o) of the Securities Purchase Agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Lost, Stolen or Mutilated Note</u>. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 18(d)) representing the outstanding Principal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Note Exchangeable for Different Denominations</u>. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section 18(d)) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Issuance of New Notes</u>. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 18(a) or Section 18(c), the Principal designated by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges, if any, on the Principal and Interest of this Note from the Issuance Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(18) <u>REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF</u>. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder's right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(19) <u>PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS</u>. If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors' rights and involving a claim under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, but not limited to, financial advisory fees and attorneys' fees and disbursements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(20) <u>CONSTRUCTION; HEADINGS</u>. This Note shall be deemed to be jointly drafted by the Company and all the Purchasers and shall not be construed against any person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(21) <u>FAILURE OR INDULGENCE NOT WAIVER</u>. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(22) <u>INTENTIONALLY OMITTED.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(23) <u>NOTICES; PAYMENTS</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Notices</u>. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefore. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least twenty (20) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Payments</u>. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, such payment shall be made in lawful money of the United States of America by a check drawn on the account of the Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing (which address, in the case of each of the Purchasers, shall initially be as set forth on the Schedule of Buyers attached to the Securities Purchase Agreement); provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available funds by providing the Company with prior written notice setting out such request and the Holder's wire transfer instructions. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day and, in the case of any Interest Date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of Interest due on such date. Any amount of Principal or other amounts due under the Transaction Documents which is not paid when due shall result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate of eighteen percent (18%) per annum from the date such amount was due until the same is paid in full ("**Late Charge**").

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(24) <u>CANCELLATION</u>. After all Principal, accrued Interest and other amounts at any time owed on this Note have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(25) <u>WAIVER OF NOTICE</u>. To the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Securities Purchase Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(26) <u>GOVERNING LAW; JURISDICTION; SEVERABILITY; JURY TRIAL</u>. This Note shall be construed and enforced in accor-dance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Note. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company's obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. **THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(27) <u>CERTAIN DEFINITIONS</u>. For purposes of this Note, the following terms shall have the following meanings:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "**Business Day**" means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) "**Calendar Quarter**" means each of: the period beginning on and including January 1 and ending on and including March 31; the period beginning on and including April 1 and ending on and including June 30; the period beginning on and including July 1 and ending on and including September 30; and the period beginning on and including October 1 and ending on and including December 31.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) "**Change of Control**" means any Fundamental Transaction other than (A) any reorganization, recapitalization or reclassification of the Common Stock, in which holders of the Company's voting power immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, the voting power of the surviving entity or entities necessary to elect a majority of the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities, or (B) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company, or (C) any Fundamental Transaction in which the Holder is the Person or part of the group of Persons described in clauses (i)(A) – (D) or clause (ii) of the definition thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) "**Closing Date**" shall have the meaning set forth in the Securities Purchase Agreement which corresponds to the date this Note and the Other Notes were initially issued pursuant to the terms of the Securities Purchase Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) "**Convertible Securities**" means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for Common Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) "**Eligible Market**" means the Principal Market (OTC Pink Mkt), The New York Stock Exchange, Inc., the American Stock Exchange, The NASDAQ Global Select Market, The NASDAQ Global Market or The NASDAQ Capital Market, or any market that is a successor to any of the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) "**Fiscal Quarters**" means each of the fiscal quarters adopted by the Company for financial reporting purposes that correspond to the Company's fiscal year that ends on December 31, or such other fiscal quarter adopted by the Company for financial reporting purposes in accordance with GAAP.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) "**Fundamental Transaction**" means that (i) the Company shall, directly or indirectly, in one or more related transactions, (A) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person or Persons, if the holders of the Voting Stock (not including any shares of Voting Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such consolidation or merger) immediately prior to such consolidation or merger shall hold or have the right to direct the voting of less than 50% of the Voting Stock or such voting securities of such other surviving Person immediately following such transaction, or (B) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person, or (C) allow another Person to make a purchase, tender or exchange offer that is accepted by the holders of more than the 50% of the outstanding shares of Voting Stock (not including any shares of Voting Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (D) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than the 50% of the outstanding shares of Voting Stock (not including any shares of Voting Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination), (E) reorganize, recapitalize or reclassify its Common Stock or (ii) any "person" or "group" (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate Voting Stock of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) "**GAAP**" means United States generally accepted accounting principles, consistently applied.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) "**Indebtedness**" of any Person means, without duplication (i) all indebtedness for borrowed money, (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services, including (without limitation) "capital leases" in accordance with GAAP (other than trade payables entered into in the ordinary course of business), (iii) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (vi) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (vii) all indebtedness referred to in clauses (i) through (vi) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (viii) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (i) through (vii) above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) "**Interest Rate**" means, seven and one-quarter (7.25%) percent per annum, subject to adjustment as set forth in Section 2 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) "**Options**" means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) "**Parent Entity**" of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) "**Permitted Indebtedness**" means (i) Indebtedness incurred by the Company that is made expressly subordinate in right of payment to the Indebtedness evidenced by this Note, as reflected in a written agreement and which Indebtedness does not provide at any time for (1) the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any principal or premium, if any, thereon until ninety-one (91) days after the Maturity Date or later and (2) total interest and fees at a rate in excess of the initial Interest Rate per annum (such Indebtedness, the "**Subordinated Indebtedness**"); provided, however, that any Subordinated Indebtedness incurred in connection with the repayment of the Notes in full shall not be limited by clause (2) of the foregoing, (ii) Indebtedness secured by Permitted Liens, (iii) Indebtedness under this Note and the Other Notes, and (iv) extensions, refinancings and renewals of any items in clauses (i) through (ii) above, provided that the principal amount is not increased or the terms modified to impose more burdensome terms upon the Company or its Subsidiaries, as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) "**Person**" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) "**Principal Market**" means the OTC Pink Open Markets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) "**Required Holders**" means the holders of Notes representing at least a majority of the aggregate principal amount of the Notes then outstanding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) "**SEC**" means the United States Securities and Exchange Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) "**Subsidiary**" means any entity in which the Company, directly or indirectly, owns any of the capital stock or holds an equity or similar interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) "**Successor Entity**" means the Person, which may be the Company, formed by, resulting from or surviving any Fundamental Transaction or the Person with which such Fundamental Transaction shall have been made, provided that if such Person is not a publicly traded entity whose common stock or equivalent equity security is quoted or listed for trading on an Eligible Market, Successor Entity shall mean such Person's Parent Entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) "**Trading Day**" means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded; provided that "Trading Day" shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York Time).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) "**Voting Stock**" of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers or trustees of such Person (irrespective of whether or not at the time capital stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

[Signature Page Follows]

------

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set out above.

---

| |
|:---|
| **ALPHA ENERGY, INC.** |
| By: |
| Name: |
| Title: |

---

------

**EXHIBIT I**<br>**ALPHA ENERGYT, INC.**

**CONVERSION NOTICE**

Reference is made to the Senior Secured Convertible Note (the "**Note**") issued to the undersigned by Alpha Energy, Inc. (the "**Company**"). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of the Note indicated below into shares of Common Stock par value $0.001 per share (the "**Common Stock**") of the Company, as of the date specified below.

---

| |
|:---|
| Date of Conversion: |
| Aggregate Conversion Amount to be converted: |
| Please confirm the following information: |
| Conversion Price: |
| Number of shares of Common Stock to be issued: |
| Please issue the Common Stock into which the Note is being converted in the following name and to the following address: |
| Issue to: |
| Facsimile Number: |
| Authorization: |
| By: |
| Title: |
| Dated: |
| Account Number: |
| (if electronic book entry transfer) |
| Transaction Code Number: |
| (if electronic book entry transfer) |

---

------

**ACKNOWLEDGMENT**

The Company hereby acknowledges this Conversion Notice and hereby directs **[ ]** to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _________ [●], ______ from the Company and acknowledged and agreed to by **[ ]**.

---

| | |
|:---|:---|
| ALPHA ENERGY, INC. | ALPHA ENERGY, INC. |
| By: |  |
|  | Name: |
|  | Title: |

---

## Exhibit 10.7

**Exhibit 10.7**

**SECURITY AGREEMENT**

**SECURITY AGREEMENT**, dated as of December 31, 2022 (this "**Agreement**") made by **Alpha Energy, Inc.**, a Colorado corporation (the "**Company**"), and the undersigned subsidiaries of the Company (each a "**Grantor**" and collectively and together with the Company, the "**Grantors**"), in favor of **AEI MANAGEMENT, INC**., a Colorado corporation, in its capacity as collateral agent (in such capacity, the "**Collateral Agent**") (as defined below) party to the Note Purchase Agreement dated as of December 31, 2022, which shall replace in its entirely and amend and restate that certain Contractual Investment Agreement, dated as of February 25, 2022 (as amended, restated or otherwise modified from time to time, the **"Note Purchase Agreement"**).

<u>W</u> <u>I</u> <u>T</u> <u>N</u> <u>E</u> <u>S</u> <u>S</u> <u>E</u> <u>T</u> <u>H</u>:

WHEREAS, **Alpha Energy, Inc.**, a Colorado corporation (the **"Company"**), and each party listed as a **"Buyer"** on the Schedule of Buyers attached to the Note Purchase Agreement (collectively, the **"Buyers"**) are parties to the Note Purchase Agreement, pursuant to which the Company has agreed to sell, and the Buyers have agreed to purchase, the Company's 7.25% Senior Secured Convertible Promissory Notes (the **"Notes"**);

WHEREAS, it is a condition precedent to the Buyers purchasing the Notes pursuant to the Note Purchase Agreement that the Grantors execute and deliver to the Collateral Agent this Agreement providing for the grant to the Collateral Agent for the benefit of the Buyers of a first priority perfected security interest in the personal property of each Grantor to secure all of the Company's obligations under the Note Purchase Agreement, the Notes issued pursuant thereto (as such Notes may be amended, restated, replaced or otherwise modified from time to time in accordance with the terms thereof, collectively, the **"Notes"**) and the other "Transaction Documents" (each of which is set forth as Exhibit A – Exhibit B to the Note Purchase Agreement), on such terms and conditions as are set forth herein; and

WHEREAS, the Grantors have determined that the execution, delivery and performance of this Agreement directly benefits, and is in the best interest of, the Grantors.

NOW, THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Buyers to perform under the Note Purchase Agreement, each Grantor agrees with the Collateral Agent, for the benefit of the Buyers, as follows:

SECTION 1. <u>Definitions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Reference is hereby made to the Note Purchase Agreement and the Notes for a statement of the terms thereof. All terms used in this Agreement and the recitals hereto which are defined in the Note Purchase Agreement, the Notes or in Articles 8 or 9 of the Uniform Commercial Code as in effect from time to time in the State of Colorado (the "**Code**"), and which are not otherwise defined herein shall have the same meanings herein as set forth therein; <u>provided</u> that terms used herein which are defined in the Code as in effect in the State of Colorado on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as the Collateral Agent may otherwise determine.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The following terms shall have the respective meanings provided for in the Code: "Accounts", "Cash Proceeds", "Chattel Paper", "Commercial Tort Claim", "Commodity Account", "Commodity Contracts", "Deposit Account", "Documents", "Equipment", "Fixtures", "General Intangibles", "Goods", "Instruments", "Inventory", "Investment Property", "Letter-of-Credit Rights", "Noncash Proceeds", "Payment Intangibles", "Proceeds", "Promissory Notes", "Security", "Record", "Security Account", "Software", and "Supporting Obligations".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally to both the singular and plural forms of such terms:

"**Capital Stock**" means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, and (ii) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person.

"**Copyright Licenses**" means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensee or licensor and providing for the grant of any right to use or sell any works covered by any copyright (including, without limitation, all Copyright Licenses set forth in <u>Schedule II</u> hereto).

"**Copyrights**" means all domestic and foreign copyrights, whether registered or not, including, without limitation, all copyright rights throughout the universe (whether now or hereafter arising) in any and all media (whether now or hereafter developed), in and to all original works of authorship fixed in any tangible medium of expression, acquired or used by any Grantor (including, without limitation, all copyrights described in <u>Schedule II</u> hereto), all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Copyright Office or in any similar office or agency of the United States or any other country or any political subdivision thereof), and all reissues, divisions, continuations, continuations in part and extensions or renewals thereof.

"**Event of Default**" shall have the meaning set forth in the Notes.

"**Governmental Authority**" means any nation or government, any Federal, state, city, town, municipality, county, local or other political subdivision thereof or thereto and any department, commission, board, bureau, instrumentality, agency or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

"**Insolvency Proceeding**" means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the United States Code) or under any other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, or extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

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"**Intellectual Property**" means the Copyrights, Trademarks and Patents.

"**Licenses**" means the Copyright Licenses, the Trademark Licenses and the Patent Licenses.

"**Lien**" means any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any Collateral (including accounts and contract rights).

"**Patent Licenses**" means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensee or licensor and providing for the grant of any right to manufacture, use or sell any invention covered by any Patent (including, without limitation, all Patent Licenses set forth in <u>Schedule II</u> hereto).

"**Patents**" means all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets, ideas, concepts, methods, techniques, processes, proprietary information, technology, know-how, formulae, rights of publicity and other general intangibles of like nature, now existing or hereafter acquired (including, without limitation, all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets, ideas, concepts, methods, techniques, processes, proprietary information, technology, know-how and formulae described in <u>Schedule II</u> hereto), all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office, or in any similar office or agency of the United States or any other country or any political subdivision thereof), and all reissues, divisions, continuations, continuations in part and extensions or renewals thereof.

**"Person"** means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization, joint venture or other enterprise or entity or Governmental Authority.

"**Trademark Licenses**" means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensor or licensee and providing for the grant of any right concerning any Trademark, together with any goodwill connected with and symbolized by any such trademark licenses, contracts or agreements and the right to prepare for sale or lease and sell or lease any and all Inventory now or hereafter owned by any Grantor and now or hereafter covered by such licenses (including, without limitation, all Trademark Licenses described in <u>Schedule II</u> hereto).

"**Trademarks**" means all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a's, Internet domain names, trade styles, designs, logos and other source or business identifiers and all general intangibles of like nature, now or hereafter owned, adopted, acquired or used by any Grantor (including, without limitation, all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a's, Internet domain names, trade styles, designs, logos and other source or business identifiers described in <u>Schedule II</u> hereto), all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof), and all reissues, extensions or renewals thereof, together with all goodwill of the business symbolized by such marks and all customer lists, formulae and other Records of any Grantor relating to the distribution of products and services in connection with which any of such marks are used.

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SECTION 2. <u>Grant of Security Interest.</u> As collateral security for all of the "Obligations" (as defined in <u>Section 3</u> hereof), each Grantor hereby pledges and assigns to the Collateral Agent for the benefit of the Buyers, and grants to the Collateral Agent for the benefit of the Buyers a continuing security interest in, all personal property of each Grantor, wherever located and whether now or hereafter existing and whether now owned or hereafter acquired, of every kind and description, tangible or intangible consisting of the proceeds and production of 34 well bores and related assets under that certain Purchase and Sale Agreement with Progressive Well Service, LLC. (the "**Logan 1 Collatera**l")(collectively, the "**Collateral**"), including, without limitation, the following, in each case, limited to the Company's interest in the Logan 1 Collateral:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) all Accounts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) all Chattel Paper (whether tangible or electronic);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the Commercial Tort Claims specified on Schedule VI hereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) all Deposit Accounts, all cash and other property from time to time deposited therein and the monies and property in the possession or under the control of the Collateral Agent or Buyer or any affiliate, representative, agent or correspondent of the Collateral Agent or Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) all Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) all Equipment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) all Fixtures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) all General Intangibles (including, without limitation, all Payment Intangibles);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) all Goods

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) all Instruments (including, without limitation, Promissory Notes and each certificated Security);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) all Inventory;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) all Investment Property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) all Copyrights, Patents and Trademarks, and all Licenses and Leases;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) all Letter-of-Credit Rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) all Supporting Obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) all other tangible and intangible personal property of each Grantor (whether or not subject to the Code), including, without limitation, all bank and other accounts and all cash and all investments therein, all proceeds, products, offspring, accessions, rents, profits, income, benefits, substitutions and replacements of and to any of the property of any Grantor described in the preceding clauses of this Section 2 (including, without limitation, any proceeds of insurance thereon and all causes of action, claims and warranties now or hereafter held by each Grantor in respect of any of the items listed above), and all books, correspondence, files and other Records, including, without limitation, all tapes, desks, cards, Software, data and computer programs in the possession or under the control of any Grantor or any other Person from time to time acting for any Grantor, in each case, to the extent of such Grantors rights therein, that at any time evidence or contain information relating to any of the property described in the preceding clauses of this Section 2 or are otherwise necessary or helpful in the collection or realization thereof; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of any and all of the foregoing Collateral;

in each case howsoever any Grantor's interest therein may arise or appear (whether by ownership, security interest, claim or otherwise).

Notwithstanding anything herein to the contrary, the term "**Collateral**" shall not include, in the case of a Subsidiary organized under the laws of a jurisdiction other than the United States, any of the states thereof or the District of Columbia (a "**Foreign Subsidiary**"), more than 65% (or such greater percentage that, due to a change in applicable law after the date hereof, (i) would not reasonably be expected to cause the undistributed earnings of such Foreign Subsidiary as determined for United States federal income tax purposes to be treated as a deemed dividend to such Foreign Subsidiary's United States parent and (ii) would not reasonably be expected to cause any material adverse tax consequences) of the issued and outstanding shares of Capital Stock entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) (it being understood and agreed that the Collateral shall include 100% of the issued and outstanding shares of Capital Stock not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) or other equity interest of such Foreign Subsidiary).

The Grantors agree that the pledge of the shares of Capital Stock acquired by a Grantor of any and all Persons now or hereafter existing who is a Foreign Subsidiary may be supplemented by one or more separate pledge agreements, deeds of pledge, share charges, or other similar agreements or instruments, executed and delivered by the relevant Grantors in favor of the Collateral Agent, which pledge agreements will provide for the pledge of such shares of Capital Stock in accordance with the laws of the applicable foreign jurisdiction. With respect to such shares of Capital Stock, the Collateral Agent may, at any time and from time to time, in its sole discretion, take actions in such foreign jurisdictions that will result in the perfection of the Lien created in such shares of Capital Stock.

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SECTION 3. <u>Security for Obligations</u>. The security interest created hereby in the Collateral constitutes continuing collateral security for all of the following obligations, whether now existing or hereafter incurred (collectively, the "**Obligations**"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) for so long as the Notes are outstanding, (i) the payment by the Company, as and when due and payable (by scheduled maturity, required prepayment, acceleration, demand or otherwise), of all amounts from time to time owing by it in respect of the Note Purchase Agreement, the Notes and the other Transaction Documents, and (ii) as and when due and payable of all, including, without limitation, in both cases, (A) all principal of and interest on the Notes (including, without limitation, all interest that accrues after the commencement of any Insolvency Proceeding of any Grantor, whether or not the payment of such interest is unenforceable or is not allowable due to the existence of such Insolvency Proceeding), and (B) all fees, commissions, expense reimbursements, indemnifications and all other amounts due or to become due under any of the Transaction Documents; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) for so long as the Notes are outstanding, the due performance and observance by each Grantor of all of its other obligations from time to time existing in respect of any of the Transaction Documents, including without limitation, with respect to any conversion or redemption rights of the Buyers under the Notes.

SECTION 4. <u>Representations and Warranties.</u> Each Grantor represents and warrants as of the date of this Agreement as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Schedule I</u> hereto sets forth (i) the exact legal name of each Grantor, and (ii) the state of incorporation, organization or formation and the organizational identification number of each Grantor in such state.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) There is no pending or, to its knowledge, written notice threatening any action, suit, proceeding or claim affecting the Company or any subsidiary before any governmental authority or any arbitrator, or any order, judgment or award issued by any governmental authority or arbitrator, in each case, that may adversely affect the grant by any Grantor, or the perfection, of the security interest purported to be created hereby in the Collateral, or the exercise by the Collateral Agent of any of its rights or remedies hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) All Federal, state and local tax returns and other reports required by applicable law to be filed by any Grantor have been filed, or extensions have been obtained, and all taxes, assessments and other governmental charges imposed upon any Grantor or any property of any Grantor (including, without limitation, all federal income and social security taxes on employees' wages) and which have become due and payable on or prior to the date hereof have been paid, except to the extent contested in good faith by proper proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves have been set aside for the payment thereof in accordance with generally accepted accounting principles consistently applied ("GAAP").

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) All Equipment, Fixtures, Goods and Inventory of each Grantor now existing are, and all Equipment, Fixtures, Goods and Inventory of each Grantor hereafter existing will be, located and/or based at the addresses specified therefor in Schedule III hereto, except that each Grantor will give the Collateral Agent written notice of any change in the location of any such Collateral within 20 days of such change, other than to locations set forth on Schedule III hereto (or a new Schedule III delivered by the Grantors to the Collateral Agent from time to time) and with respect to which the Collateral Agent has filed financing statements and otherwise fully perfected its Liens thereon or will take such actions pursuant to Section 5(n). Each Grantor's chief place of business and chief executive office, the place where each Grantor keeps its Records concerning Accounts and all originals of all Chattel Paper are located at the addresses specified therefor in Schedule III hereto. None of the Accounts is evidenced by Promissory Notes or other Instruments. Set forth in Schedule IV hereto is a complete and accurate list, as of the date of this Agreement, of (i) each Promissory Note, Security and other Instrument owned by each Grantor and (ii) each Deposit Account, Securities Account and Commodities Account of each Grantor, together with the name and address of each institution at which each such account is maintained, the account number for each such account and a description of the purpose of each such account. Set forth in Schedule II hereto is a complete and correct list of each trade name used by each Grantor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Each Grantor has delivered to the Collateral Agent complete and correct copies of each License described in Schedule II hereto, including all schedules and exhibits thereto, which represents all of the Licenses existing on the date of this Agreement. Each such License sets forth the entire agreement and understanding of the parties thereto relating to the subject matter thereof, and there are no other agreements, arrangements or understandings, written or oral, relating to the matters covered thereby or the rights of such Grantor or any of its affiliates in respect thereof. Each material License now existing is, and any material License entered into in the future will be, the legal, valid and binding obligation of the parties thereto, enforceable against such parties in accordance with its terms. No default under any material License by any such party has occurred, nor does any defense, offset, deduction or counterclaim exist thereunder in favor of any such party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Each Grantor owns and controls, or otherwise possesses adequate rights to use, all Trademarks, Patents and Copyrights, which are the only trademarks, patents, copyrights, inventions, trade secrets, proprietary information and technology, know-how, formulae, rights of publicity necessary to conduct its business in substantially the same manner as conducted as of the date hereof. Schedule II hereto sets forth a true and complete list of all registered copyrights, issued Patents, Trademarks, and Licenses annually owned or used by each Grantor as of the date hereof. To the best knowledge of each Grantor, all such Intellectual Property of each Grantor is subsisting and in full force and effect, has not been adjudged invalid or unenforceable, is valid and enforceable and has not been abandoned in whole or in part. Except as set forth in Schedule II, no such Intellectual Property is the subject of any licensing or franchising agreement. Each Grantor has no knowledge of any conflict with the rights of others to any such Intellectual Property and, to the best knowledge of each Grantor, each Grantor is not now infringing or in conflict with any such rights of others in any material respect, and to the best knowledge of each Grantor, no other Person is now infringing or in conflict in any material respect with any such properties, assets and rights owned or used by each Grantor. No Grantor has received any notice that it is violating or has violated the trademarks, patents, copyrights, inventions, trade secrets, proprietary information and technology, know-how, formulae, rights of publicity or other intellectual property rights of any third party.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Each Grantor is and will be at all times the sole and exclusive owner of, or otherwise has and will have adequate rights in, the Collateral free and clear of any Liens, except for Permitted Liens. No effective financing statement or other instrument similar in effect covering all or any part of the Collateral is on file in any recording or filing office except such as (i) may have been filed in favor of the Collateral Agent and/or the Buyers relating to this Agreement or the other Security Documents and (ii) are described on <u>Schedule 4(g)</u> hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The exercise by the Collateral Agent of any of its rights and remedies hereunder will not contravene any law or any contractual restriction binding on or otherwise affecting each Grantor or any of its properties and will not result in or require the creation of any Lien, upon or with respect to any of its properties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or other regulatory body, is required for (i) the grant by each Grantor, or the perfection, of the security interest purported to be created hereby in the Collateral, or (ii) the exercise by the Collateral Agent of any of its rights and remedies hereunder, except (except (A) for the filing under the Uniform Commercial Code as in effect in the applicable jurisdiction of the financing statements described in <u>Schedule V</u> hereto (or a new <u>Schedule V</u> delivered by the Grantors to the Collateral Agent from time to time), all of which financing statements have been duly filed and are in full force and effect or will be duly filed and in full force and effect, (B) with respect to Deposit Accounts, and all cash and other property from time to time deposited therein, for the execution of a control agreement with the depository institution with which such account is maintained, as provided in <u>Section 5(i)</u>, (C) with respect to Commodity Contracts, for the execution of a control agreement with the commodity intermediary with which such commodity contract is carried, as provided in <u>Section 5(i)</u>, (D) with respect to the perfection of the security interest created hereby in the United States Intellectual Property and Licenses, for the recording of the appropriate Assignment for Security, substantially in the form of <u>Exhibit A</u> hereto in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, (E) with respect to the perfection of the security interest created hereby in foreign Intellectual Property and Licenses, for registrations and filings in jurisdictions located outside of the United States and covering rights in such jurisdictions relating to such foreign Intellectual Property and Licenses, (F) with respect to the perfection of the security interest created hereby in Titled Collateral, for the submission of an appropriate application requesting that the Lien of the Collateral Agent be noted on the Certificate of Title or certificate of ownership, completed and authenticated by the applicable Grantor, together with the Certificate of Title or certificate of ownership, with respect to such Titled Collateral, to the appropriate governmental authority, (G) with respect to the perfection of the security interest created hereby in any Letter-of-Credit Rights, for the consent of the issuer of the applicable letter of credit to the assignment of proceeds as provided in the Uniform Commercial Code as in effect in the applicable jurisdiction, (H) with respect to any action that may be necessary to obtain control of Collateral constituting Deposit Accounts, Commodity Contracts, Electronic Chattel Paper, Investment Property or Letter-of-Credit Rights, the taking of such actions, and (I) the Collateral Agent having possession of all Documents, Chattel Paper, Instruments and cash constituting Collateral (subclauses (A), (B), (C), (D), (E), (F), G), (H) and (I), each a "<u>Perfection Requirement</u>" and collectively, the "<u>Perfection Requirements</u>").

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) This Agreement creates in favor of the Collateral Agent a legal, valid and enforceable security interest in the Collateral, as security for the Obligations. The Perfection Requirements result in the perfection of such security interests. Such security interests are, or in the case of Collateral in which each Grantor obtains rights after the date hereof, will be, perfected, first priority security interests, subject only to Permitted Liens and the Perfection Requirements and the financing statements described in <u>Schedule 4(g)</u>. Such recordings and filings and all other action necessary to perfect and protect such security interest have been duly taken or will be taken pursuant to Section 5(n), and, in the case of Collateral in which each Grantor obtains rights after the date hereof, will be duly taken, except for the Collateral Agent's having possession of all Documents, Chattel Paper, Instruments and cash constituting Collateral after the date hereof and the other actions, filings and recordations described above, including the Perfection Requirements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) As of the date hereof, no Grantor holds any Commercial Tort Claims or has knowledge of any pending Commercial Tort Claims, except for such Commercial Tort Claims described in <u>Schedule VI</u>.

SECTION 5. <u>Covenants as to the Collateral</u>. So long as any of the Obligations shall remain outstanding, unless the Collateral Agent shall otherwise consent in writing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Further Assurances</u>. Each Grantor will at its expense, at any time and from time to time, promptly execute and deliver all further instruments and documents and take all further action that the Collateral Agent may reasonably request in order to: (i) perfect and protect the security interest purported to be created hereby; (ii) enable the Collateral Agent to exercise and enforce its rights and remedies hereunder in respect of the Collateral; or (iii) otherwise effect the purposes of this Agreement, including, without limitation: (A) marking conspicuously all Chattel Paper and each License and, at the request of the Collateral Agent, each of its Records pertaining to the Collateral with a legend, in form and substance satisfactory to the Collateral Agent, indicating that such Chattel Paper, License or Collateral is subject to the security interest created hereby, (B) delivering and pledging to the Collateral Agent pursuant to the Pledge each Promissory Note, Security, Chattel Paper or other Instrument, now or hereafter owned by any Grantor, duly endorsed and accompanied by executed instruments of transfer or assignment, all in form and substance satisfactory to the Collateral Agent, (C) executing and filing (to the extent, if any, that any Grantor's signature is required thereon) or authenticating the filing of, such financing or continuation statements, or amendments thereto, as may be necessary or that the Collateral Agent may reasonably request in order to perfect and preserve the security interest purported to be created hereby, (D) furnishing to the Collateral Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral in each case as the Collateral Agent may reasonably request, all in reasonable detail, (E) if any Collateral shall be in the possession of a third party, notifying such Person of the Collateral Agent's security interest created hereby and obtaining a written acknowledgment from such Person that such Person holds possession of the Collateral for the benefit of the Collateral Agent, which such written acknowledgement shall be in form and substance reasonably satisfactory to the Collateral Agent, (F) if at any time after the date hereof, any Grantor acquires or holds any Commercial Tort Claim, promptly notifying the Collateral Agent in a writing signed by such Grantor setting forth a brief description of such Commercial Tort Claim and granting to the Collateral Agent a security interest therein and in the proceeds thereof, which writing shall incorporate the provisions hereof and shall be in form and substance satisfactory to the Collateral Agent, (G) upon the acquisition after the date hereof by any Grantor of any motor vehicle or other Equipment subject to a certificate of title or ownership (other than a Motor Vehicle or Equipment that is subject to a purchase money security interest), causing the Collateral Agent to be listed as the lienholder on such certificate of title or ownership and delivering evidence of the same to the Collateral Agent in accordance with Section 5(j) hereof; and (H) taking all actions required by any earlier versions of the Uniform Commercial Code or by other law, as applicable, in any relevant Uniform Commercial Code jurisdiction, or by other law as applicable in any foreign jurisdiction.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Location of Equipment and Inventory</u>. Each Grantor will keep the Equipment and Inventory (i) at the locations specified therefor on Schedule III hereto, or (ii) at such other locations set forth on Schedule III (or a new Schedule III delivered by the Grantors to Collateral Agent from time to time) and with respect to which the Collateral Agent has filed financing statements and otherwise fully perfected its Liens thereon, or (iii) at such other locations in the United States, provided that within 20 days following the relocation of Equipment or Inventory to such other location or the acquisition of Equipment or Inventory, such Grantor shall deliver to the Collateral Agent a new Schedule III indicating such new locations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Condition of Equipment</u>. Each Grantor will maintain or cause the Equipment (necessary or useful to its business) to be maintained and preserved in good condition, repair and working order, ordinary wear and tear excepted, and will forthwith, or in the case of any loss or damage to any Equipment of any Grantor within a commercially reasonable time after the occurrence thereof, make or cause to be made all repairs, replacements and other improvements in connection therewith which are necessary or desirable, consistent with past practice, or which the Collateral Agent may request to such end. Any Grantor will promptly furnish to the Collateral Agent a statement describing in reasonable detail any such loss or damage in excess of $250,000 per occurrence to any Equipment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Taxes, Etc.</u> Each Grantor agrees to pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the Equipment and Inventory, except to the extent the validity thereof is being contested in good faith by proper proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves in accordance with GAAP have been set aside for the payment thereof.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Insurance</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Each Grantor will, at its own expense, maintain insurance (including, without limitation, commercial general liability and property insurance) with respect to the Equipment and Inventory in such amounts, against such risks, in such form and with responsible and reputable insurance companies or associations as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated and in any event, in amount, adequacy and scope reasonably satisfactory to the Collateral Agent. To the extent requested by the Collateral Agent at any time and from time to time, each such policy for liability insurance shall provide for all losses to be paid on behalf of the Collateral Agent and any Grantor as their respective interests may appear, and each policy for property damage insurance shall provide for all losses to be adjusted with, and paid directly to, the Collateral Agent. To the extent requested by the Collateral Agent at any time and from time to time, each such policy shall in addition (A) name the Collateral Agent as an additional insured party thereunder (without any representation or warranty by or obligation upon the Collateral Agent) as their interests may appear, (B) contain an agreement by the insurer that any loss thereunder shall be payable to the Collateral Agent on its own account notwithstanding any action, inaction or breach of representation or warranty by any Grantor, (C) provide that there shall be no recourse against the Collateral Agent for payment of premiums or other amounts with respect thereto, and (D) provide that at least 30 days' prior written notice of cancellation, lapse, expiration or other adverse change shall be given to the Collateral Agent by the insurer. Any Grantor will, if so requested by the Collateral Agent, deliver to the Collateral Agent original or duplicate policies of such insurance and, as often as the Collateral Agent may reasonably request, a report of a reputable insurance broker with respect to such insurance. Any Grantor will also, at the request of the Collateral Agent, execute and deliver instruments of assignment of such insurance policies and cause the respective insurers to acknowledge notice of such assignment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Reimbursement under any liability insurance maintained by any Grantor pursuant to this Section 5(e) may be paid directly to the Person who shall have incurred liability covered by such insurance. Following an Event of Default, in the case of any loss involving damage to Equipment or Inventory, any proceeds of insurance maintained by any Grantor pursuant to this Section 5(e) shall be paid to the Collateral Agent (except as to which paragraph (iii) of this Section 5(e) is not applicable), any Grantor will make or cause to be made the necessary repairs to or replacements of such Equipment or Inventory, and any proceeds of insurance maintained by any Grantor pursuant to this Section 5(e) shall be paid by the Collateral Agent to any Grantor as reimbursement for the costs of such repairs or replacements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Following and during the continuance of an Event of Default, all insurance payments in respect of such Equipment or Inventory shall be paid to the Collateral Agent and applied as specified in <u>Section 7(b)</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Provisions Concerning the Accounts and the Licenses</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Each Grantor will (A) give the Collateral Agent at least 30 days' prior written notice of any change in such Grantor's name, identity or organizational structure, (B) maintain its jurisdiction of incorporation, organization or formation as set forth in Schedule I hereto, (C) immediately notify the Collateral Agent upon obtaining an organizational identification number, if on the date hereof such Grantor did not have such identification number, and (D) keep adequate records concerning the Accounts, in accordance with Section 4 (i) of the Note Purchase Agreement and Chattel Paper.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Each Grantor will, except as otherwise provided in this subsection (f), continue to collect, at its own expense, all amounts due or to become due under the Accounts. In connection with such collections, any Grantor may (and, at the Collateral Agent's direction, will) take such action as any Grantor or the Collateral Agent may deem necessary or advisable to enforce collection or performance of the Accounts; provided, however, that the Collateral Agent shall have the right at any time, upon the occurrence and during the continuance of an Event of Default, to notify the account debtors or obligors under any Accounts of the assignment of such Accounts to the Collateral Agent and to direct such account debtors or obligors to make payment of all amounts due or to become due to any Grantor thereunder directly to the Collateral Agent or its designated agent and, upon such notification and at the expense of any Grantor and to the extent permitted by law, to enforce collection of any such Accounts and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as any Grantor might have done. After receipt by any Grantor of a notice from the Collateral Agent that the Collateral Agent has notified, intends to notify, or has enforced or intends to enforce any Grantor's rights against the account debtors or obligors under any Accounts as referred to in the proviso to the immediately preceding sentence, (A) all amounts and proceeds (including Instruments) received by any Grantor in respect of the Accounts shall be received in trust for the benefit of the Collateral Agent hereunder, shall be segregated from other funds of any Grantor and shall be forthwith paid over to the Collateral Agent in the same form as so received (with any necessary endorsement) to be applied as specified in Section 7(b) hereof, and (B) no Grantor will adjust, settle or compromise the amount or payment of any Account or release wholly or partly any account debtor or obligor thereof or allow any credit or discount thereon. In addition, upon the occurrence and during the continuance of an Event of Default, the Collateral Agent may (in its sole and absolute discretion) direct any or all of the banks and financial institutions with which any Grantor either maintains a Deposit Account or a lockbox or deposits the proceeds of any Accounts to send immediately to the Collateral Agent by wire transfer (to such account as the Collateral Agent shall specify, or in such other manner as the Collateral Agent shall direct) all or a portion of such securities, cash, investments and other items held by such institution. Any such securities, cash, investments and other items so received by the Collateral Agent shall be applied as specified in accordance with Section 7(b) hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Upon the occurrence and during the continuance of any breach or default under any material License (or Lease) referred to in Schedule II hereto by any party thereto other than any Grantor, each Grantor party thereto will, promptly after obtaining knowledge thereof, give the Collateral Agent written notice of the nature and duration thereof, specifying what action, if any, it has taken and proposes to take with respect thereto and thereafter will take reasonable steps to protect and preserve its rights and remedies in respect of such breach or default, or will obtain or acquire an appropriate substitute License.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Each Grantor will, at its expense, promptly deliver to the Collateral Agent a copy of each notice or other communication received by it by which any other party to any material License referred to in Schedule II hereto purports to exercise any of its rights or affect any of its obligations thereunder, together with a copy of any reply by such Grantor thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Each Grantor will exercise promptly and diligently each and every right which it may have under each material License (other than any right of termination) and will duly perform and observe in all respects all of its obligations under each material License and will take all action reasonably necessary to maintain such Licenses in full force and effect. No Grantor will, without the prior written consent of the Collateral Agent, cancel, terminate, amend or otherwise modify in any respect, or waive any provision of, any material License referred to in Schedule II hereto.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Transfers and Other Liens</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) No Grantor will sell, assign (by operation of law or otherwise), lease, license, exchange or otherwise transfer or dispose of any of the Collateral, except (A) Inventory in the ordinary course of business, and (B) worn out or obsolete assets, not necessary to the business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) No Grantor will create, suffer to exist or grant any Lien upon or with respect to any Collateral other than a Permitted Lien.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Intellectual Property</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) In no event shall any Grantor, either itself or through any agent, employee, licensee or designee, file an application for the registration of any Trademark or Copyright or the issuance of any Patent with the United States Patent and Trademark Office or the United States Copyright Office, as applicable, or in any similar office or agency of the United States or any country or any political subdivision thereof unless it gives the Collateral Agent prior written notice thereof. Upon request of the Collateral Agent, any Grantor shall execute, authenticate and deliver any and all assignments, agreements, instruments, documents and papers as the Collateral Agent may reasonably request to evidence the Collateral Agent's security interest hereunder in such Intellectual Property and the General Intangibles of any Grantor relating thereto or represented thereby, and each Grantor hereby appoints the Collateral Agent its attorney-in-fact to execute and/or authenticate and file all such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed, and such power (being coupled with an interest) shall be irrevocable until the indefeasible payment in full in cash of all of the Obligations in full.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Deposit, Commodities and Securities Accounts</u>. Upon the Collateral Agent's written request, each Grantor shall cause each bank and other financial institution with an account referred to in <u>Schedule IV</u> hereto to execute and deliver to the Collateral Agent a control agreement, in form and substance reasonably satisfactory to the Collateral Agent, duly executed by each Grantor and such bank or financial institution, or enter into other arrangements in form and substance satisfactory to the Collateral Agent, pursuant to which such institution shall irrevocably agree, <u>inter</u> <u>alia</u>, that (i) it will comply at any time with the instructions originated by the Collateral Agent to such bank or financial institution directing the disposition of cash, Commodity Contracts, securities, Investment Property and other items from time to time credited to such account, without further consent of each Grantor, which instructions the Collateral Agent will not give to such bank or other financial institution in the absence of a continuing Event of Default, (ii) all Commodity Contracts, securities, Investment Property and other items of each Grantor deposited with such institution shall be subject to a perfected, first priority security interest in favor of the Collateral Agent, (iii) any right of set off (other than recoupment of standard fees), banker's Lien or other similar Lien, security interest or encumbrance shall be fully waived as against the Collateral Agent, and (iv) upon receipt of written notice from the Collateral Agent during the continuance of an Event of Default, such bank or financial institution shall immediately send to the Collateral Agent by wire transfer (to such account as the Collateral Agent shall specify, or in such other manner as the Collateral Agent shall direct) all such cash, the value of any Commodity Contracts, securities, Investment Property and other items held by it. Without the prior written consent of the Collateral Agent, each Grantor shall not make or maintain any Deposit Account, Commodity Account or Securities Account except for the accounts set forth in Schedule IV hereto. The provisions of this paragraph 5(i) shall not apply to (i) Deposit Accounts for which the Collateral Agent is the depositary and (ii) Deposit Accounts specially and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of each Grantor's salaried or hourly employees.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Motor Vehicles</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Upon the Collateral Agent's written request, each Grantor shall deliver to the Collateral Agent originals of the certificates of title or ownership for all motor vehicles with a value in excess of $50,000, owned by it with the Collateral Agent listed as lienholder, for the benefit of the Buyers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Each Grantor hereby appoints the Collateral Agent as its attorney-in-fact, effective the date hereof and terminating upon the termination of this Agreement, for the purpose of (A) executing on behalf of such Grantor title or ownership applications for filing with appropriate state agencies to enable motor vehicles now owned or hereafter acquired by such Grantor to be retitled and the Collateral Agent listed as lienholder thereof, (B) filing such applications with such state agencies, and (C) executing such other documents and instruments on behalf of, and taking such other action in the name of, such Grantor as the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof (including, without limitation, for the purpose of creating in favor of the Collateral Agent a perfected Lien on the motor vehicles and exercising the rights and remedies of the Collateral Agent hereunder). This appointment as attorney-in-fact is coupled with an interest and is irrevocable until all of the Obligations are indefeasibly paid in full in cash.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Any certificates of title or ownership delivered pursuant to the terms hereof shall be accompanied by odometer statements for each motor vehicle covered thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) So long as no Event of Default shall have occurred and be continuing, upon the request of any Grantor, the Collateral Agent shall execute and deliver to any Grantor such instruments as any Grantor shall reasonably request to remove the notation of the Collateral Agent as lienholder on any certificate of title for any motor vehicle; <u>provided</u>, <u>however</u>, that any such instruments shall be delivered, and the release effective, only upon receipt by the Collateral Agent of a certificate from any Grantor stating that such motor vehicle is to be sold or has suffered a casualty loss (with title thereto in such case passing to the casualty insurance company therefor in settlement of the claim for such loss) and the amount that any Grantor will receive as sale proceeds or insurance proceeds.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>Control</u>. Each Grantor hereby agrees to take any or all action that may be necessary or that the Collateral Agent may reasonably request in order for the Collateral Agent to obtain control in accordance with Sections 9-105 – 9-107 of the Code with respect to the following Collateral: (i) Electronic Chattel Paper, (ii) Investment Property, and (iii) Letter-of-Credit Rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>Inspection and Reporting</u>. Each Grantor shall permit in accordance with Section 4(i) of the Note Purchase Agreement, the Collateral Agent, or any agent or representatives thereof or such professionals or other Persons as the Collateral Agent may designate, during normal business hours, after reasonable prior notice, in the absence of an Event of Default and not more than once a year in the absence of an Event of Default, (i) to examine and make copies of and abstracts from any Grantor's records and books of account, (ii) to visit and inspect its properties, (iii) to verify materials, leases, Instruments, Accounts, Inventory and other assets of any Grantor from time to time, (iii) to conduct audits, physical counts, appraisals and/or valuations, examinations at the locations of any Grantor. Each Grantor shall also permit, in accordance with Section 4(i) of the Note Purchase Agreement, the Collateral Agent, or any agent or representatives thereof or such professionals or other Persons as the Collateral Agent may designate to discuss such Grantor's affairs, finances and accounts with any of its directors, officers, managerial employees, independent accountants or any of its other representatives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) <u>Future Subsidiaries</u>. If any Grantor shall hereafter create or acquire any Subsidiary, simultaneously with the creation or acquisition of such Subsidiary, such Grantor shall (i) cause such Subsidiary to become a party to this Agreement as an additional "Grantor" hereunder, (ii) such Grantor shall deliver to Collateral Agent revised Schedules to this Agreement, as appropriate, (iii) shall duly execute and deliver a guaranty of the Obligations in favor of the Collateral Agent in form and substance reasonably acceptable to the Collateral Agent, and (iv) shall duly execute and/or deliver such opinions of counsel and other documents, in form and substance reasonably acceptable to the Collateral Agent, as the Collateral Agent shall reasonably request with respect thereto, provided that any Grantor that acquires a subsidiary on or within two days after the Closing Date shall have 10 Business Days in which to satisfy the requirements of this Section 5(m).

SECTION 6. <u>Additional Provisions Concerning the Collateral</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) To the maximum extent permitted by applicable law, and for the purpose of taking any action that the Collateral Agent may deem necessary or advisable to accomplish the purposes of this Agreement, each Grantor hereby (i) authorizes the Collateral Agent to execute any such agreements, instruments or other documents in such Grantor's name and to file such agreements, instruments or other documents in such Grantor's name and in any appropriate filing office, (ii) authorizes the Collateral Agent at any time and from time to time to file, one or more financing or continuation statements, and amendments thereto, relating to the Collateral (including, without limitation, any such financing statements that (A) describe the Collateral as "all assets" or "all personal property" (or words of similar effect) or that describe or identify the Collateral by type or in any other manner as the Collateral Agent may determine regardless of whether any particular asset of such Grantor falls within the scope of Article 9 of the Uniform Commercial Code or whether any particular asset of such Grantor constitutes part of the Collateral, and (B) contain any other information required by Part 5 of Article 9 of the Code for the sufficiency or filing office acceptance of any financing statement, continuation statement or amendment, including, without limitation, whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor) and (iii) ratifies such authorization to the extent that the Collateral Agent has filed any such financing or continuation statements, or amendments thereto, prior to the date hereof. A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each Grantor hereby irrevocably appoints the Collateral Agent as its attorney-in-fact and proxy, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, from time to time in the Collateral Agent's discretion, so long as an Event of Default shall have occurred and is continuing, to take any action and to execute any instrument which the Collateral Agent may reasonably deem necessary or advisable to accomplish the purposes of this Agreement (subject to the rights of each Grantor under Section 5 hereof), including, without limitation, (i) to obtain and adjust insurance required to be paid to the Collateral Agent pursuant to Section 5(e) hereof, (ii) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any Collateral, (iii) to receive, endorse, and collect any drafts or other instruments, documents and chattel paper in connection with clause (i) or (ii) above, (iv) to file any claims or take any action or institute any proceedings which the Collateral Agent may deem necessary or desirable for the collection of any Collateral or otherwise to enforce the rights of the Collateral Agent and the Buyers with respect to any Collateral, and (v) to execute assignments, licenses and other documents to enforce the rights of the Collateral Agent and the Buyers with respect to any Collateral. This power is coupled with an interest and is irrevocable until all of the Obligations are indefeasibly paid in full in cash.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) For the purpose of enabling the Collateral Agent to exercise rights and remedies hereunder, at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Grantor hereby grants to the Collateral Agent, to the extent assignable, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to any Grantor) to use, assign, license or sublicense any Intellectual Property now owned or hereafter acquired by such Grantor, wherever the same may be located, including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout thereof. Notwithstanding anything contained herein to the contrary, but subject to the provisions of the Note Purchase Agreement that limit the right of any Grantor to dispose of its property, and Section 5(g) and Section 5(h) hereof, so long as no Event of Default shall have occurred and be continuing, any Grantor may exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or take other actions with respect to the Intellectual Property in the ordinary course of its business. In furtherance of the foregoing, unless an Event of Default shall have occurred and be continuing, the Collateral Agent shall from time to time, upon the request of any Grantor, execute and deliver any instruments, certificates or other documents, in the form so requested, which such Grantor shall have certified are appropriate (in such Grantor's judgment) to allow it to take any action permitted above (including relinquishment of the license provided pursuant to this clause (c) as to any Intellectual Property. Further, upon the indefeasible payment in full in cash of all of the Obligations, the Collateral Agent (subject to Section 10(e) hereof) shall release and reassign to any Grantor all of the Collateral Agent's right, title and interest in and to the Intellectual Property, and the Licenses, all without recourse, representation or warranty whatsoever. The exercise of rights and remedies hereunder by the Collateral Agent shall not terminate the rights of the holders of any licenses or sublicenses theretofore granted by each Grantor in accordance with the second sentence of this clause (c). Each Grantor hereby releases the Collateral Agent from any claims, causes of action and demands at any time arising out of or with respect to any actions taken or omitted to be taken by the Collateral Agent under the powers of attorney granted herein other than actions taken or omitted to be taken through the Collateral Agent's gross negligence or willful misconduct, as determined by a final determination of a court of competent jurisdiction.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If any Grantor fails to perform any agreement or obligation contained herein, the Collateral Agent may itself perform, or cause performance of, such agreement or obligation, in the name of such Grantor or the Collateral Agent, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by such Grantor pursuant to Section 8 hereof and shall be secured by the Collateral.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The powers conferred on the Collateral Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Anything herein to the contrary notwithstanding (i) each Grantor shall remain liable under the Licenses and otherwise with respect to any of the Collateral to the extent set forth therein to perform all of its obligations thereunder to the same extent as if this Agreement had not been executed, (ii) the exercise by the Collateral Agent of any of its rights hereunder shall not release any Grantor from any of its obligations under the Licenses or otherwise in respect of the Collateral, and (iii) the Collateral Agent shall not have any obligation or liability by reason of this Agreement under the Licenses or with respect to any of the other Collateral, nor shall the Collateral Agent be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

SECTION 7. <u>Remedies Upon Event of Default</u>. If any Event of Default shall have occurred and be continuing:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Collateral Agent may exercise in respect of the Collateral, in addition to any other rights and remedies provided for herein or otherwise available to it, all of the rights and remedies of a secured party upon default under the Code (whether or not the Code applies to the affected Collateral), and also may (i) take absolute control of the Collateral, including, without limitation, transfer into the Collateral Agent's name or into the name of its nominee or nominees (to the extent the Collateral Agent has not theretofore done so) and thereafter receive, for the benefit of the Collateral Agent, all payments made thereon, give all consents, waivers and ratifications in respect thereof and otherwise act with respect thereto as though it were the outright owner thereof, (ii) require each Grantor to, and each Grantor hereby agrees that it will at its expense and upon request of the Collateral Agent forthwith, assemble all or part of its respective Collateral as directed by the Collateral Agent and make it available to the Collateral Agent at a place or places to be designated by the Collateral Agent that is reasonably convenient to both parties, and the Collateral Agent may enter into and occupy any premises owned or leased by any Grantor where the Collateral or any part thereof is located or assembled for a reasonable period in order to effectuate the Collateral Agent's rights and remedies hereunder or under law, without obligation to any Grantor in respect of such occupation, and (iii) without notice except as specified below and without any obligation to prepare or process the Collateral for sale, (A) sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral Agent's offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Collateral Agent may deem commercially reasonable and/or (B) lease, license or dispose of the Collateral or any part thereof upon such terms as the Collateral Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale or any other disposition of its respective Collateral shall be required by law, at least ten (10) days' notice to any Grantor of the time and place of any public sale or the time after which any private sale or other disposition of its respective Collateral is to be made shall constitute reasonable notification. The Collateral Agent shall not be obligated to make any sale or other disposition of any Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Grantor hereby waives any claims against the Collateral Agent and the Buyers arising by reason of the fact that the price at which its respective Collateral may have been sold at a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Obligations, even if the Collateral Agent accepts the first offer received and does not offer such Collateral to more than one offeree, and waives all rights that any Grantor may have to require that all or any part of such Collateral be marshaled upon any sale (public or private) thereof. Each Grantor hereby acknowledges that (i) any such sale of its respective Collateral by the Collateral Agent shall be made without warranty, (ii) the Collateral Agent may specifically disclaim any warranties of title, possession, quiet enjoyment or the like, and (iii) such actions set forth in clauses (i) and (ii) above shall not adversely affect the commercial reasonableness of any such sale of Collateral. In addition to the foregoing, (1) upon written notice to any Grantor from the Collateral Agent after and during the continuance of an Event of Default, such Grantor shall cease any use of the Intellectual Property or any trademark, patent or copyright similar thereto for any purpose described in such notice; (2) the Collateral Agent may, at any time and from time to time after and during the continuance of an Event of Default, upon 10 days' prior notice to such Grantor, license, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any of the Intellectual Property, throughout the universe for such term or terms, on such conditions, and in such manner, as the Collateral Agent shall in its sole discretion determine; and (3) the Collateral Agent may, at any time, pursuant to the authority granted in Section 6 hereof (such authority being effective upon the occurrence and during the continuance of an Event of Default), execute and deliver on behalf of such Grantor, one or more instruments of assignment of the Intellectual Property (or any application or registration thereof), in form suitable for filing, recording or registration in any country.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any cash held by the Collateral Agent as Collateral and all Cash Proceeds received by the Collateral Agent in respect of any sale of or collection from, or other realization upon, all or any part of the Collateral shall be applied (after payment of any amounts payable to the Collateral Agent pursuant to <u>Section 8</u> hereof) by the Collateral Agent against, all or any part of the Obligations in such order as the Collateral Agent shall elect, consistent with the provisions of the Note Purchase Agreement. Any surplus of such cash or Cash Proceeds held by the Collateral Agent and remaining after the indefeasible payment in full in cash of all of the Obligations shall be paid over to whomsoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In the event that the proceeds of any such sale, collection or realization are insufficient to pay all amounts to which the Collateral Agent and the Buyers are legally entitled, each Grantor shall be liable for the deficiency, together with interest thereon at the highest rate specified in the Notes for interest on overdue principal thereof or such other rate as shall be fixed by applicable law, together with the costs of collection and the reasonable fees, costs, expenses and other client charges of any attorneys employed by the Collateral Agent to collect such deficiency.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Each Grantor hereby acknowledges that if the Collateral Agent complies with any applicable state, provincial, or federal law requirements in connection with a disposition of the Collateral, such compliance will not adversely affect the commercial reasonableness of any sale or other disposition of the Collateral.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Collateral Agent shall not be required to marshal any present or future collateral security (including, but not limited to, this Agreement and the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of the Collateral Agent's rights hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights, however existing or arising. To the extent that any Grantor lawfully may, each Grantor hereby agrees that it will not invoke any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of the Collateral Agent's rights under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, each Grantor hereby irrevocably waives the benefits of all such laws.

SECTION 8. <u>Indemnity and Expenses</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Each Grantor agrees, jointly and severally, to defend, protect, indemnify and hold the Collateral Agent and each of the Buyers, jointly and severally, harmless from and against any and all claims, damages, losses, liabilities, obligations, penalties, fees, costs and expenses (including, without limitation, reasonable legal fees, costs, expenses, and disbursements of such Person's counsel) to the extent that they arise out of or otherwise result from this Agreement (including, without limitation, enforcement of this Agreement), except to the extent resulting from such Person's gross negligence or willful misconduct, as determined by a final judgment of a court of competent jurisdiction.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each Grantor agrees, jointly and severally, to pay to the Collateral Agent upon demand the amount of any and all costs and expenses, including the reasonable fees, costs, expenses and disbursements of counsel for the Collateral Agent and of any experts and agents (including, without limitation, any collateral trustee which may act as agent of the Collateral Agent), which the Collateral Agent may incur in connection with (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment, waiver or other modification or termination of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any Collateral, (iii) the exercise or enforcement of any of the rights of the Collateral Agent hereunder, or (iv) the failure by any Grantor to perform or observe any of the provisions hereof.

SECTION 9. <u>Notices, Etc.</u> All notices and other communications provided for hereunder shall be in writing and shall be mailed (by certified mail, postage prepaid and return receipt requested), telecopied, e-mailed or delivered, if to any Grantor that is a Foreign Subsidiary at the address of the Company, if to any Grantor that is not a Foreign Subsidiary at its address below and if to the Collateral Agent to it, at its address specified on the signature pages below; or as to any such Person, at such other address as shall be designated by such Person in a written notice to all other parties hereto complying as to delivery with the terms of this Section 9. All such notices and other communications shall be effective (a) if sent by certified mail, return receipt requested, when received or three days after deposited in the mails, whichever occurs first, (b) if telecopied or e-mailed, when transmitted (during normal business hours) and confirmation is received, and otherwise, the day after the notice or communication was transmitted and confirmation is received, or (c) if delivered in person, upon delivery. For the avoidance of doubt, the Foreign Subsidiaries, as Grantors, hereby appoint the Company as its agent for receipt of service of process and all notices and other communications in the United States at the address specified below.

SECTION 10. <u>Miscellaneous.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) No amendment of any provision of this Agreement shall be effective unless it is in writing and signed by each Grantor and the Collateral Agent, and no waiver of any provision of this Agreement, and no consent to any departure by each Grantor therefrom, shall be effective unless it is in writing and signed by each Grantor and the Collateral Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) No failure on the part of the Collateral Agent to exercise, and no delay in exercising, any right hereunder or under any of the other Transaction Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of the Collateral Agent or any Buyer provided herein and in the other Transaction Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights of the Collateral Agent or any Buyer under any of the other Transaction Documents against any party thereto are not conditional or contingent on any attempt by such Person to exercise any of its rights under any of the other Transaction Documents against such party or against any other Person, including but not limited to, any Grantor.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect until the indefeasible payment in full in cash of the Obligations, and (ii) be binding on each Grantor and all other Persons who become bound as debtor to this Agreement in accordance with Section 9-203(d) of the Code and shall inure, together with all rights and remedies of the Collateral Agent and the Buyers hereunder, to the benefit of the Collateral Agent and the Buyers and their respective permitted successors, transferees and assigns. Without limiting the generality of clause (ii) of the immediately preceding sentence, without notice to any Grantor, the Collateral Agent and the Buyers may assign or otherwise transfer their rights and obligations under this Agreement and any of the other Transaction Documents in accordance with the respective Transaction Documents, to any other Person and such other Person shall thereupon become vested with all of the benefits in respect thereof granted to the Collateral Agent and the Buyers herein or otherwise. Upon any such assignment or transfer, all references in this Agreement to the Collateral Agent or any such Buyer shall mean the assignee of the Collateral Agent or such Buyer. None of the rights or obligations of any Grantor hereunder may be assigned or otherwise transferred without the prior written consent of the Collateral Agent, and any such assignment or transfer without the consent of the Collateral Agent shall be null and void.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Upon the indefeasible payment in full in cash of the Obligations, (i) this Agreement and the security interests created hereby shall terminate and all rights to the Collateral shall revert to the respective Grantor that granted such security interests hereunder, and (ii) the Collateral Agent will, upon any Grantor's request and at such Grantor's expense, (A) return to such Grantor such of the Collateral as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof, and (B) execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination, all without any representation, warranty or recourse whatsoever.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE STATE OF COLORADO.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF COLORADO IN THE COUNTY OF DENVER OR THE UNITED STATES OF AMERICA FOR THE DISTRICT OF COLORADO, AND APPELLATE COURTS THEREOF, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GRANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) EACH GRANTOR AND (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT) THE COLLATERAL AGENT WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, ORAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES HERETO.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Each Grantor irrevocably consents to the service of process of any of the aforesaid courts in any such action, suit or proceeding by the mailing of copies thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to any Grantor at its address provided herein, such service to become effective 10 days after such mailing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) Nothing contained herein shall affect the right of the Collateral Agent to serve process in any other manner permitted by law or commence legal proceedings or otherwise proceed against any Grantor or any property of any Grantor in any other jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) Each Grantor irrevocably and unconditionally waives any right it may have to claim or recover in any legal action, suit or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) Section headings herein are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together constitute one in the same Agreement.

**[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]**

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IN WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and delivered by its officer thereunto duly authorized, as of the date first above written.

**COMPANY:**

ALPHA ENERGY, INC.

By:<u> </u><u> </u><u> </u><u> </u><u> </u>

Name: Jay Leaver

Title: President

Address: 4162 Meyerwood Drive

Houston, TX 77025

**HOLDER:**

**AEI MANAGEMENT, INC.**

By:<u> </u><u> </u><u> </u><u> </u><u> </u>

Name: Harry McMillan

Title: Chief Executive Officer

Address: AEI Management, INC.

2600 E. Southlake Blvd.,

Ste 120-366

Southlake, TX 76092

**20 SHEKELS, INC.**

By:___________________________

Name: Jay Leaver

Title: President

Address: 20 Shekels, Inc. PO Box 5196 Buena Vista, CO 81211

**ACCEPTED BY:**

**AEI MANAGEMENT, INC.**

By:<u> </u><u> </u><br> Name: Harry McMillan

Title: Chief Executive Officer

Address: AEI Management, INC.

2600 E. Southlake Blvd.,

Ste 120-366

Southlake, TX 76092

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<u>SCHEDULE I</u>

LEGAL NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS;<br> <u>STATE OR JURISDICTION OF ORGANIZATIONS</u>

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| | | | |
|:---|:---|:---|:---|
| **<u>Grantor's Name</u>** | **<u>State of Organization</u>** | **<u>Federal</u>** <br> **<u>Employer I.D.</u>** | **<u>Organizational I.D.</u>** |
| Alpha Energy Texas Operating, LLC |  |  |  |

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Sched. I-1

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<u>SCHEDULE II</u><br><u>INTELLECTUAL PROPERTY</u>

**<u>Trademarks</u>**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **<u>Grantor</u>** | **<u>Country</u>** | **<u>Trademark</u>** | **<u>Application or</u>** <br> **<u>Registration No.</u>** | **<u>Filing Date</u>** | **<u>Registration Date</u>** | **<u>Assignees</u>** |

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**<u>Patents</u>**

**<u>Copyrights</u>**

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<u>SCHEDULE III</u><br><u>LOCATIONS</u>

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| | | | | |
|:---|:---|:---|:---|:---|
| **<u>Grantor's Name</u>** | **<u>Chief Executive Office</u>** | **<u>Chief Place of Business</u>** | **<u>Books and Records</u>** | **<u>Inventory, Equipment, Etc.</u>** |

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<u>SCHEDULE IV</u><br>PROMISSORY NOTES, SECURITIES, DEPOSIT ACCOUNTS,<br> <u>SECURITIES ACCOUNTS AND COMMODITIES ACCOUNTS</u>

**<u>Securities</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| **<u>Grantor</u>** | **<u>Name of Issuer</u>** | **<u>Number of Shares</u>** | **<u>Class</u>** | **Certificate**<br> **<u>No.(s)</u>** |

---

**<u>Deposit Accounts</u>**

---

| | | | |
|:---|:---|:---|:---|
| **<u>Grantor</u>** | **<u>Name and Address of Institution</u>** | **<u>Purpose of the Account</u>** | **<u>Account No.</u>** |

---

------

<u>SCHEDULE V</u><br><u>FINANCING STATEMENTS</u>

---

| | |
|:---|:---|
| **Grantor** | **Jurisdictions For Filing Financing Statements** |
|  | Colorado SOS |

---

------

<u>SCHEDULE VI</u>

<u>COMMERCIAL TORT CLAIMS</u>

------

<u>EXHIBIT A</u><br><u>ASSIGNMENT FOR SECURITY</u><br><u>[TRADEMARKS] [PATENTS] [COPYRIGHTS]</u>

WHEREAS, **______________________________** (the "<u>Assignor</u>") [has adopted, used and is using, and holds all right, title and interest in and to, the trademarks and service marks listed on the annexed <u>Schedule</u><u> </u><u>1A</u>, which trademarks and service marks are registered or applied for in the United States Patent and Trademark Office (the "<u>Trademarks</u>")] [holds all right, title and interest in the letter patents, design patents and utility patents listed on the annexed <u>Schedule</u><u> </u><u>1A</u>, which patents are issued or applied for in the United States Patent and Trademark Office (the "<u>Patents</u>")] [holds all right, title and interest in the copyrights listed on the annexed <u>Schedule 1A</u>, which copyrights are registered in the United States Copyright Office (the "<u>Copyrights</u>")];

WHEREAS, the Assignor has entered into a Security Agreement, dated as of August __, 2007 (as amended, restated, supplemented or as otherwise modified or replaced from time to time, the "<u>Security Agreement</u>"), in favor of Castlerigg Master Investments Ltd., as collateral agent for certain purchasers (the "<u>Assignee</u>");

WHEREAS, pursuant to the Security Agreement, the Assignor has assigned to the Assignee and granted to the Assignee for the benefit of the Buyers (as defined in the Security Agreement) a continuing security interest in all right, title and interest of the Assignor in, to and under the [Trademarks, together with, among other things, the good-will of the business symbolized by the Trademarks] [Patents] [Copyrights] and the applications and registrations thereof, and all proceeds thereof, including, without limitation, any and all causes of action which may exist by reason of infringement thereof and any and all damages arising from past, present and future violations thereof (the "<u>Collateral</u>"), to secure the payment, performance and observance of the "Obligations" (as defined in the Security Agreement);

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Assignor does hereby pledge, convey, sell, assign, transfer and set over unto the Assignee and grants to the Assignee for the benefit of the Buyers a continuing security interest in the Collateral to secure the prompt payment, performance and for the benefit of the Buyers observance of the Obligations.

The Assignor does hereby further acknowledge and affirm that the rights and remedies of the Assignee with respect to the Collateral are more fully set forth in the Security Agreement, the terms and provisions of which are hereby incorporated herein by reference as if fully set forth herein.

------

IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly executed by its officer thereunto duly authorized as of _____________, 20__

---

| | |
|:---|:---|
| **[GRANTORS]** | **[GRANTORS]** |
| By: |  |
|  | Name: |
|  | Title: |

---

------

STATE OF ____________<br> ss.:<br> COUNTY OF __________

On this ____ day of _______________, 20__, before me personally came ________________, to me known to be the person who executed the foregoing instrument, and who, being duly sworn by me, did depose and say that s/he is the ________________ of _______________________________________, a ____________________, and that s/he executed the foregoing instrument in the firm name of _______________________________________, and that s/he had authority to sign the same, and s/he acknowledged to me that he executed the same as the act and deed of said firm for the uses and purposes therein mentioned.

<u>SCHEDULE 1A TO ASSIGNMENT FOR SECURITY</u>

[Trademarks and Trademark Applications]<br> [Patent and Patent Applications]<br> [Copyright and Copyright Applications]<br> Owned by ______________________________

------

Schedule 4(g)<br><u>Effective Financing Statements</u>

## Exhibit 10.10

**Exhibit 10.10**

![ex_473551img001.jpg](ex_473551img001.jpg)

**SUBSCRIPTION AGREEMENT**

Alpha Energy, Inc.

4162 Meyerwood Dr.

Houston, TX 77025

Gentlemen and Ladies:

The undersigned desires to invest in Alpha Energy, Inc. (the "<u>Company</u>") on the terms and conditions described in this subscription agreement dated<u> </u>, 2022 (the "<u>Subscription</u> <u>Agreement</u>"). Under this Subscription Agreement, the Company is offering to subscribers to purchase up to 1,750,000 shares of the Company's restricted common stock (par value $0.0001 per share) for the purchase price of $1.00 per share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Subscription** 

Subject to and in accordance with the terms and conditions of this Subscription Agreement, the undersigned hereby offers to purchase<u> </u>shares of the Company's restricted common stock (the "<u>Shares</u>") for a total purchase price of $<u> </u><u> </u>(U.S. dollars). The undersigned hereby delivers to the Company the full purchase price for the subscription for the Shares in the form of a check or wire transfer. The undersigned understands and agrees that this Subscription Agreement constitutes the binding obligation of the undersigned to deliver the full purchase price to the Company for the portion of the subscription accepted by the Company. The undersigned will be notified by the Company whether, and to what extent, the undersigned's subscription has been accepted. The Company reserves the right in its sole discretion to reject all or part of any subscription. If a subscription is not accepted in whole for any other reason, the subscription amount that was not accepted will be returned to the undersigned without interest. The undersigned understands and agrees that this subscription is irrevocable.

The subscription period for the Shares will terminate upon the earliest to occur of (a) May 31, 2022, or such other date as the Company in its sole discretion may select, or (b) receipt and acceptance by the Company of subscriptions for the sale of all the securities offered. The funds from this offering may be utilized by the Company in the manner it sees fit. The Shares are being offered and sold, and this subscription is being made, pursuant to the terms and conditions set forth in this Subscription Agreement. The common stock comprising the Shares shall not be deemed issued to or owned by the undersigned until the Company has delivered to the undersigned notice of acceptance of this Subscription Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.** **Representations and Warranties Of The Undersigned** 

The undersigned hereby represents and warrants to, and agrees with, the Company as follows:

<u> </u><u> </u>

&nbsp;&nbsp;&nbsp;&nbsp;Initials Initials

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) (i) the undersigned can bear the economic risk of losing the undersigned's entire investment in the Shares of Common Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the undersigned is acquiring the Shares for investment purposes only and the Shares must be held by the undersigned without sale, transfer, or other disposition for an indefinite period unless the transfer of the Shares subsequently are, registered under the U.S. federal securities laws or unless exemptions from registration are available;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the undersigned's overall commitments to investments that are not readily marketable is not disproportionate to the undersigned's net worth and the undersigned's investment in the Shares will not cause such overall commitments to become excessive;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) the undersigned's financial condition is such that the undersigned is under no present or contemplated future need to dispose of any portion of the Shares to satisfy any existing or contemplated undertaking, need, or indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) the undersigned has adequate means of providing for the undersigned's current needs and personal contingencies and has no need for liquidity in the undersigned's investment in the Shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) the undersigned has sufficient knowledge and experience in business and financial matters to evaluate and has evaluated the merits and risks of this investment; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) the undersigned understands that oil and gas ventures carry additional risks unique to the oil and gas industry and that the undersigned has had the opportunity to review the attached offering with qualified energy experts and has been afforded the opportunity to inquire therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The address set forth below on the signature page of this Subscription Agreement is the undersigned's true and correct residence, and the undersigned has no present intention of becoming a resident of any other state or jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The undersigned is an "accredited investor" as that term is defined in Rule 501 of Regulation D, as promulgated under the Securities Act of 1933, as amended (the "Securities Act"), because the undersigned meets one of the following criteria (**IF THE UNDERSIGNED IS NOT AN** "**ACCREDITED INVESTOR** "**, PLACE AN** "**X** "**IN THE FOLLOWING BLANK: <u> </u>):** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) An individual with a net worth, individually or jointly with the undersigned's spouse, of $1,000,000; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) An individual with income in excess of $200,000 in each of the two most recent years, or joint income with the undersigned's spouse in excess of $600,000 in each of those years, and the undersigned has a reasonable expectation of reaching the same income level in the current year; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) An individual who is an officer or director of the Company; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) A corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $3,000,000; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) A trust with total assets in excess of $3,000,000 not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D, as promulgated under the Securities Act; or

<u> </u><u> </u>

&nbsp;&nbsp;&nbsp;&nbsp;Initials Initials

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) An entity in which all of the equity owners are accredited investors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The undersigned confirms that all documents, records and books pertaining to an investment in the Shares that have been requested by the undersigned have been made available or delivered to the undersigned. Without limiting the foregoing, the undersigned has (i) had the opportunity to discuss the acquisition of the Shares with the Company, and (ii) obtained or been given access to all information concerning the Company that the undersigned has requested. As a result of its review of the Company, including the review of the materials provided to the undersigned, the undersigned understands, among other things, the following: the Company has limited financial resources, and has never operated at a profit; and the Company may not in the future, receive additional investment funds, and the Company will not be able to implement its business plan without additional investment funds. The undersigned further represents the undersigned is cognizant of the operations, financial condition and capitalization of the Company, and has available full information concerning the Company's affairs to evaluate the merits and risks of the investment in the Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The undersigned has had the opportunity to ask questions of, and receive answers from, the Company concerning the terms of an investment in the Shares and to receive additional information necessary to verify the accuracy of the information delivered to the undersigned.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The undersigned understands that the Shares have not been registered under the U.S. Securities Act of 1933, as amended (the " <u>Securities Act</u> "), or any state securities laws in reliance on an exemption for private offerings and no U.S. federal or state agency has made any finding or determination as to the fairness of this investment or any recommendation or endorsement of the offering of the Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The Shares for which the undersigned hereby subscribes for are being and will be acquired solely for the undersigned's own account, for investment, and is not being purchased with a view to or for the resale, distribution, subdivision, or fractionalization thereof; the undersigned has no agreement or arrangement for any such resale, distribution, subdivision, or fractionalization thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The undersigned acknowledges that, in making the decision to purchase the Shares, it has relied solely upon independent investigations made by the undersigned.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The undersigned has the full right, power, and authority to enter this Subscription Agreement and to carry out and consummate the transactions herein. This Subscription Agreement constitutes the legal, valid, and binding obligation of the undersigned.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) The undersigned represents that an investment in the Shares is a suitable investment for the undersigned.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) The undersigned is not associated with or an affiliate of any member firm of the National Association of Securities Dealers, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) The undersigned acknowledges and is aware that the following legend will be imprinted on the certificates representing the Shares subscribed to by the undersigned:

**THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER FEDERAL OR STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, OR OTHERWISE DISPOSED OF UNLESS SO REGISTERED OR QUALIFIED OR UNLESS AN EXEMPTION EXISTS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED BY AN OPINION OF COUNSEL TO THE REGISTERED HOLDER (WHICH OPINION AND COUNSEL SHALL BOTH BE SATISFACTORY TO THE COMPANY).**

<u> </u><u> </u>

&nbsp;&nbsp;&nbsp;&nbsp;Initials Initials

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) The undersigned acknowledges and is aware of the following, in addition to other information included in the information provided to the undersigned:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Shares are a speculative investment and involve a high degree of risk of loss by the undersigned of the undersigned's total investment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) There are substantial restrictions on the transferability of the Shares. The Shares cannot be transferred, pledged, hypothecated, sold, or otherwise disposed of unless it is registered under the Securities Act, or an exemption from such registration is available and established to the satisfaction of the Company; investors in the Company have no right to require that any transfer of the Shares be registered under the Securities Act and the Company is under no obligation to register the Share; there is a limited public market for the Company's common stock; and accordingly, the undersigned may have to hold the Shares indefinitely; and it may not be possible for the undersigned to liquidate the undersigned's investment in the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) The undersigned understands and agrees that the Company is relying upon the accuracy, completeness, and truth of the undersigned's representations, warranties, agreements, and certifications contained in this Subscription Agreement, in determining the undersigned's suitability as an investor in the Company and in establishing compliance with federal and state securities laws. The undersigned understands that any incomplete, inaccurate, or untruthful response, or the breach of the undersigned's representations, warranties, agreements, or certifications, may result in the undersigned or the Company, or both, being in violation of federal or state securities laws, and any person, including the Company, who suffers damage as a result may have a claim against the undersigned for damages. The undersigned also acknowledges that the undersigned is indemnifying the Company and others for these and other losses in accordance with <u>Section 3</u> of this Subscription Agreement.

The foregoing representations and warranties are true and accurate as of the date hereof and shall survive the delivery of the subscription amount and the completed Subscription Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.** **Indemnification** 

The undersigned acknowledges that the undersigned understands the meaning and legal consequences of the representations, warranties, agreements, and certifications contained above, and the undersigned hereby agrees to indemnify and hold harmless each of the Company, its managers, officers, directors, representatives, and agents from and against any and all loss, damage, or liability due to or arising out of a breach of any representation, warranty, agreement, or certification, or the inaccuracy of any statement, of the undersigned contained in this Subscription Agreement or any other document submitted by the undersigned in connection with the undersigned's subscription for the Shares. The foregoing notwithstanding, nothing in this Subscription Agreement, including the representations, warranties, agreements, and certifications contained above, shall be deemed to constitute a waiver of any rights that the undersigned may have under the Securities Act and other federal and state securities laws.

<u> </u><u> </u>

&nbsp;&nbsp;&nbsp;&nbsp;Initials Initials

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.** **Miscellaneous** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) This Subscription Agreement may be executed in one or more counterparts all of which taken together shall constitute a single instrument.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) This Subscription Agreement shall be governed and construed as binding upon the parties hereto, and their respective successors, and no other person shall have any right or obligation hereunder. This subscription for the purchase of the Shares is irrevocable, and may not be assigned by the undersigned. Subject to the foregoing, this Subscription Agreement is binding upon and inures to the benefit of the heirs, executors, administrators, legal representatives, and successors of the undersigned.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) This Subscription Agreement constitutes the entire agreement between the undersigned and the Company with respect to the subject matter of this Subscription Agreement and supersedes all prior and contemporaneous agreements between the undersigned and the Company with respect to the subject matter of this Subscription Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) This Subscription Agreement will be construed and enforced in accordance with and governed by the laws of the State of Colorado, except for matters arising under the Act, without reference to principles of conflicts of law.

------

With such full understandings and acknowledgements, the undersigned does hereby affirm the undersigned's subscription for the purchase of the Shares being offered by the Company as described herein. The undersigned does further acknowledge the undersigned's understandings of all the terms and provisions of this Subscription Agreement and agrees to be bound by all of the terms and conditions of this Subscription Agreement.

------

**PAYMENT INSTRUCTIONS FOR THIS SUBSCRIPTION AGREEMENT FOLLOW THE SIGNATURE PAGES**

<u> </u><u> </u>

&nbsp;&nbsp;&nbsp;&nbsp;Initials Initials

------

**SIGNATURE PAGE FOR INDIVIDUALS**

Please complete the following:

Date:<u> </u>

Exact Name in Which Title is to be Held

---

| | |
|:---|:---|
| Signature<br>| Signature of Co-Owner |
| Print Name<br>| Print Name of Co-Owner |
| Social Security Number<br>| Social Security Number |
| Address<br>|  |
| City/State/ZIP Code/Country<br>|  |
| Telephone Number | Email Address |

---

\*If the Shares are to be held in joint tenancy or as tenants in common, both persons must sign above and please indicate the manner in which the Shares are to be held:

☐ Tenants in Common ☐ Joint Tenants

This subscription is accepted by Alpha Energy, Inc. on this<u> </u>day of<u> </u>, 2022.

---

| | |
|:---|:---|
| **ALPHA ENERGY, INC.** | **ALPHA ENERGY, INC.** |
| By: |  |
|  | &nbsp;&nbsp;&nbsp;John Lepin, Principal Executive Officer |

---

------

**SIGNATURE PAGE FOR ENTITIES**

Please complete the following:

Date:<u> </u><u> </u>

---

| | |
|:---|:---|
| Printed Name of Entity<br>|  |
| Signature<br>|  |
| Print Name and Title<br>|  |
| Social Security Number<br>|  |
| Address<br>|  |
| City/State/ZIP Code/Country<br>|  |
| Tax Identification Number<br>|  |
| Telephone Number | Email Address |

---

This subscription is accepted by Alpha Energy, Inc. on this<u> </u>day of<u> </u>, 2022.

---

| | |
|:---|:---|
| **ALPHA ENERGY, INC.** | **ALPHA ENERGY, INC.** |
| By: |  |
|  | &nbsp;&nbsp;&nbsp;John Lepin, Principal Executive Officer |

---

------

**PAYMENT INSTRUCTIONS**

**If by Wire:**

---

| | | |
|:---|:---|:---|
| **Bank** | : | **Amegy Bank** |
|  |  | 1717 W. Loop S. |
|  |  | Houston, TX. 77027 |
| **ABA Routing No.** | : | 113011258 |
| **For Further Credit To** | : | Alpha Energy, Inc. |
| **Account No.** | : | 5795799005 |

---

**If by Mail:**

Attn: John Lepin

4162 Meyerwood Drive

Houston, TX 77025

**PLEASE SIGN, SCAN AND EMAIL THE SUBSCRIPTION AGREEMENT TO**

**info@alpha-energy.us**

## Exhibit 10.11

**Exhibit 10.11**

![fidare.jpg](fidare.jpg)

------

**CONSULTING AGREEMENT**

------

This **AGREEMENT** (the "Agreement") is effective on September 2, 2022, (the "**<u>Effective Date</u>**") by and between **Alpha Energy, Inc.** , a Colorado company (the "**<u>Company</u>**"), and **Fidare Consulting Group, LLC**, a Texas limited liability company (the "**<u>Consultant</u>**").

**WHEREAS,** the Company is an independent oil and gas company engaged in the identification, acquisition, development, and sale of natural gas and crude oil;

**WHEREAS**, the Consultant has expertise in the areas of corporate structuring, strategic planning, and compliance issues;

**WHEREAS**, the Company desires to engage the Consultant and the Consultant desires to utilize its expertise to advise the Company to further its current and future projects and advance its business plan;

**WHEREAS**, the Company acknowledges that the Consultant has previously provided expertise in the areas of corporate structuring, strategic planning, asset identification and compliance and is currently on a month-to- month contract. This Agreement will nullify prior Agreements between the parties but does not limit any fees, compensation, or reimbursement expenses that may be owed to the Consultant;

**NOW, THEREFORE**, in consideration of the following and the mutual promises herein contained, the parties hereto agree as follows;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Services to Be Provided, Scope of Agreement, and Relationship of the Parties** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company hereby agrees to engage Consultant and to continue to provide the advice relating to the preparation and maintenance of corporate books and records; implementing and maintaining accounting controls; maintaining accounting books and records; maintaining and updating internal controls and procedures to ensure compliance with Sarbanes-Oxley/404 compliance; maintaining corporate governance controls and procedures; assisting with maintaining full reporting status; assisting with maintaining current listing status and researching potential exchange up-listing; assisting with corporate strategies; assisting with management and board member search; and overseeing and maintaining shareholder matters (the "  **<u>Consulting Services</u>**" or "  **<u>Services</u>** ").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company acknowledges that Consultant has many other business interests and will devote as much time as in its discretion as necessary to perform its duties under this Agreement. In addition, the Company acknowledges that Consultant's effort on behalf of its other interests is the sole and separate property of the Consultant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The services rendered by Consultant to the Company pursuant to this Agreement shall be as an independent contractor, and this Agreement does not make Consultant the employee, agent, or legal representative of the Company for any purpose whatsoever, including without limitation, participation in any benefits or privileges given or extended by the Company to its employees. No right or authority is granted to Consultant to assume or to create any obligation or responsibility, express or implied, on behalf of or in the name of the Company, except as may be set forth herein. In that regard, Consultant agrees that it shall act solely at the express direction of the Company's Chief Executive Officer and shall coordinate all contacts with third parties, including without limitation potential sources of capital, through the Chief Executive Officer. The Company shall not withhold for Consultant and federal or state taxes from the amounts to be paid to Consultant hereunder, and Consultant agrees that it will pay all taxes due on such amounts.

<u> </u><u> </u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Initials Initials

------

![fidare.jpg](fidare.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Consultant shall provide the Company with such other advisory and consulting services as the Company may specifically request. Specific fees for each separate service rendered by Consultant shall be established at the time Consultant is requested to undertake each service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.** **Compensation** 

As compensation for the Consulting Services provided hereunder in this Agreement, the Company agrees to compensate the Consultant fifteen thousand ($15,000.00) dollars per month during the term of this Agreement.

The Company agrees to make payment to the Consultant via electronic funds transfer to an account designated by the Consultant. The Company agrees to make said payment no later than the 5<sup>th</sup> of each month during the term or if the 5<sup>th</sup> falls on a weekend, the next business day.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.** **Expenses** 

The Company shall continue to reimburse the Consultant for all pre-approved reasonable and necessary expenses incurred by it in providing the Consulting Services under this Agreement. Consultant shall submit related receipts and documentation with its request for reimbursement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.** **Term and Termination** 

This Agreement shall commence on the Effective Date described above and it shall be valid for a period of twelve (12) months (the "**<u>Initial Term</u>**") and will automatically renew on a month-to-month thereafter.

This Agreement shall continue in effect until terminated by either party, but no less than 180 days after the Effective Date (the "Minimum Period"). Either of the parties may terminate this Agreement after the Minimum Period if the other party shall have failed to fulfill or cure a material obligation under this Agreement and shall not have cured the material obligation within 10-business days of receiving written notice of the deficiency (a "**<u>Breach</u>**"). If a party fails to cure a Breach, the counter-party may terminate the Agreement with 30-days written notice.

Termination or expiration of this Agreement shall not extinguish any rights or compensation owed or accrued as described in Section 2 or Section 3 of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.** **Confidential Information** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "Confidential Information" as used in this Section 5, means information that is not generally known and that is proprietary to the Company or that the Company is obligated to treat as proprietary. This information includes, without limitation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Trade secret information about the Company and its operations, plans, strategies, sources of capital, acquisition targets and financial results.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Information concerning the Company's business as the Company has conducted it since the Company's incorporation or as it may conduct it in the future; and

<u> </u><u> </u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Initials Initials

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![fidare.jpg](fidare.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Information concerning any of the Company's past, current, or possible future products, including (without limitation) information about the Company's research, development, engineering, purchasing, manufacturing, accounting, marketing, selling, or leasing efforts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any information that Consultant reasonably considers Confidential Information, or that the Company treats as Confidential Information, will be presumed to be Confidential Information (whether Consultant or others originated it and regardless of how it obtained it).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Except as required in its duties to the Company, Consultant will never, either during or after the term of this Agreement, use or disclose Confidential Information to any person not authorized by the Company to receive it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If this Agreement is terminated, Consultant will promptly turn over to the Company all records and any compositions, articles, devices, apparatus and other items that disclose, describe, or embody Confidential Information, including all copies, reproductions, and specimens of the Confidential Information in its possession, regardless of who prepared them. The rights of the Company set forth in this Section 5 are in addition to any rights of the Company with respect to protection of trade secrets or confidential information arising out of the common or statutory laws of the State of Colorado or any other state or any country wherein Consultant may from time to time perform services pursuant to this Agreement. This Section 5 shall survive the termination or expiration of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Consultant hereby acknowledge, on behalf of its members, managers, affiliates, attorneys, advisors, agents and representatives ("Representatives"), that it is aware (and that its Representatives who are apprised of this atter have been advised) of Consultant's responsibility under the U.S. federal securities laws with respect to purchasing or selling securities of a company about which Consultant (or its Representatives) have material nonpublic information and agree that Consultant and its Representatives will not use, nor cause any third party to use, any information in contravention of such securities laws or any rules o regulations promulgated thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.** **False or Misleading Information** 

The Company agrees to use commercially reasonable efforts to provide Consultant with accurate financial, corporate, and other data reasonably requested by Consultant in connection with the performance with its services hereunder. The Company hereby indemnifies Consultant from any and all 08t-of-pocket costs, expenses or damages incurred, and holds Consultant harmless from any and all claims and/or actions that may result solely and directly from the Company's intentional breach of this covenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.** **Miscellaneous** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Successors and Assigns</u>. This Agreement is binding on and ensures to the benefit of the Company, its successors and assigns, all of which are included in the term the "Company" as it is used in this Agreement and upon Consultant, its successors and assigns. Neither this Agreement nor any duty or right hereunder will be assignable or otherwise transferable by either party without the written consent of the other party, except that the Company shall assign this Agreement in connection with a merger, consolidation, assignment, sale or other disposition of substantially all of its assets or business.

<u> </u><u> </u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Initials Initials

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![fidare.jpg](fidare.jpg)

This Agreement will be deemed materially breached by the Company if its successor or assign does not assume substantially all of the Company's obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Modification</u>. This Agreement may be modified or amended only by a writing signed by both the Company and Consultant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Governing Law.</u> The laws of Texas will govern the validity, construction, and performance of this Agreement. Any legal proceeding related to this Agreement will be brought in an appropriate Texas court, and both the Company and Consultant hereby consent to the exclusive jurisdiction of that court for this purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Construction.</u> Wherever possible, each provision of this Agreement will be interpreted wo that it is valid under the applicable law. If any provision of this Agreement is to any extent invalid under the applicable law, that provision will still be effective to the extent it remains valid. The remainder of this Agreement also will continue to be valid, and the entire Agreement will continue to be valid in other jurisdictions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Waivers.</u> No failure or delay by either the Company or Consultant in exercising any right or remedy under this Agreement will waive any provision of the Agreement, nor will any single or partial exercise by either the Company or Consultant of any right or remedy under this Agreement preclude either of them from otherwise or further exercising these rights or remedies, or any other rights or remedies granted by any law or any related document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Captions.</u> The headings in this Agreement are for convenience only and do not affect this Agreement's interpretation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Notices.</u> All notices and other communications required or permitted under this Agreement shall be in writing and sent by registered first-class mail, postage prepaid, and shall be effective five days after mailing to the attention of the signatories to this Agreement at the address stated below. These addresses may be changed at any time by like notice.

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| | |
|:---|:---|
| **In the case of the Company:** | **Alpha Energy, Inc.**<br> **Jay Leaver, President**<br> **14143 Denver West Parkway** <br> **Suite 100**<br> **Golden, CO 80401** |
| **In the case of the Consultant:** | **Fidare Consulting Group, LLC**<br> **David Delaney, Manager** <br> **1224 N. Highway 377**<br> **Suite 303, PMB 56**<br> **Roanoke, TX 76262** |

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<u> </u><u> </u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Initials Initials

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![fidare.jpg](fidare.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Counterparts; Original</u>.This Agreement may be executed in counterparts which, when taken together, will constitute one Agreement. Copies of this Agreement will be equally binding as originals and faxes or scanned, and emailed counterpart signatures will be sufficient to evidence execution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Entire Agreement.</u> This Agreement supersedes all previous and contemporaneous oral negotiations, commitments, writings, and understandings between the parties concerning the matters in this Agreement.

**[Signature Page to Follow]**

<u> </u><u> </u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Initials Initials

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![fidare.jpg](fidare.jpg)

**IN WITNESS WHEREOF,** the parties have duly executed this Agreement, effective as of the date and year first above written

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| | |
|:---|:---|
| **COMPANY:** | **CONSULTANT:** |
| **Alpha Energy, Inc.** | **Fidare Consulting Group, LLC** |
| **By:<u> </u>** | **By:<u> </u>** |
| Jay Leaver, President | David Delaney, Manager |
| Date:<u> </u> | Date:<u> </u> |

---

<u> </u><u> </u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Initials Initials

## Exhibit 10.13

**Exhibit 10.13**

**CONSULTANT** 

**ENGAGEMENT AGREEMENT**

This Agreement is made the 15th day of October 2022, by and between Alpha Energy, Inc. (the "Company"), a Colorado Consultant having an office at 14143 Denver West Blvd #100, Golden, CO 80401 and Matador Wellsite Consulting, LLC, an Oklahoma entity with an address at P.O. Box 151, Stillwater, OK 74076 (the "Consultant"). Company and Consultant shall be collectively referred to herein as "Parties" and individually as "Party".

Alpha Energy, Inc. hereby engages Matador, as Consultant, under the following terms and conditions, to be effective as of the date above written.

WHEREAS, the Company desires professional guidance and advice regarding energy operations and development and desires Consultant to aid it in business matters; and

WHEREAS, Jeffrey Wright ("Wright") is the Manager of Consultant and has expertise in the area of energy operations, project development, and oil field management; and

WHEREAS, Consultant is willing to provide the services of Wright to act as an advisor to the Company upon the terms and conditions set forth in this Agreement. Unless specified otherwise, Jeffrey Wright and Matador Wellsite Consulting, LLC shall together herein be referred to as Consultant; and

WHEREAS, Consultant is to be hereby engaged to act as Operations Manager of Alpha Energy, Inc.

NOW, THEREFORE, in consideration of the foregoing and the mutual promises herein contained, the Parties hereto agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Duties, Scope of Agreement, and Relationship of the Parties** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company hereby agrees to retain Consultant as Operations Manager, consistent with Consultant's expertise and ability in energy operations and development, and Consultant agrees to so act for the Company during the term of this Agreement under the Job Description attached as Exhibit A. All Parties understand that Consultant has many other business interests and will devote as much time as in his sole and absolute discretion is necessary to perform his duties under this Agreement. In addition, the Company understands that consultant's efforts on behalf of his other interests are the sole and separate property of Consultant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The services rendered by Consultant to the Company pursuant to this Agreement shall be as an independent contractor at times and dates convenient to Consultant, and this Agreement does not make Consultant the Consultant of the Company for any purpose whatsoever. No right or authority is granted to Consultant to assume or to create any obligation or responsibility, in excess of $1,000, express or implied, on behalf of or in the name of the Company except as authorized by the Company's President or Board. The Company shall not withhold for Consultant any federal or state taxes from the amounts to be paid to Consultant hereunder, and Consultant agrees that he will pay all taxes due on such amounts.

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|:---|:---|
| Alpha-Matador Consulting Agreement 10-2022 | ![init01.jpg](init01.jpg) |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Consultant agrees to make available to Company his services as Operations Manager er on an as needed basis on reasonable request. Consultant shall provide planning and other advisory services within the scope of the Job Description as are necessary to carry out the business of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Company recognizes Consultant has other business interests and clients. To prevent potential conflicts of interest:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Parties agree that Consultant's work for Company shall be geographically restricted to the area of Section 6, T17N R2W and Sections 1-2 and 11-14, T17N R3W, all in Logan County, OK and content-restricted to the Job Description (together, the "Alpha-Matador AMI"). Other areas may be added to the Alpha-Matador AMI only by mutual consent in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Consultant has from time-to-time generated information and ideas relevant to oil and gas exploration ("Consultant Intellectual Property"). Company shall not obtain through this Agreement any rights of access, control, or ownership of Consultant Intellectual Property. Consultant is the sole determiner of what constitutes Consultant Intellectual Property. During the scope of Consultant's engagement under this Agreement, Consultant may from time to time provide data, spreadsheets, models, or formulas to the Company or its affiliates ("Consultant Data") for use in building and improving the Company's internal models, determining suitable projects to explore, surveying land, or other such uses to be determined by the Consultant. For the avoidance of doubt, such Consultant Data has been previously gathered and analyzed by Consultant and is considered "Consultant Intellectual Property." Additionally, the use of such Consultant Data by Consultant or the Company may lead to modifications to the Consultant Data correcting or clarifying the existing Consultant Data (the "Data Modifications"). Notwithstanding any provision herein to the contrary, the Consultant Data and the Data Modifications, if any, shall be the sole property of the Consultant, including if such Consultant Data is modified or expanded by the Data Modifications within the scope of the engagement discussed herein. At any time, the Consultant may request that such Consultant Data be returned to Consultant and any records of such Consultant Data be destroyed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Consultant has ongoing oil and gas projects outside of the Alpha-Matador AMI. Nothing in this Agreement shall be construed to give Company any rights to any project or research outside the Alpha-Matador AMI.

&nbsp;&nbsp;&nbsp;&nbsp;**2.** **Compensation** 

(a) The Company will pay US$10,000.00 per month to Consultant as a consulting fee. These payments will be made to the account and entity designated by Consultant on an invoice submitted on or after the last day of the month, and shall be paid timely by Company. The first month of October, 2022 shall be fifty percent (50%) or $5,000.00. In the event of termination of this Agreement by either party, Consultant will be due a prorated amount based on the actual number of days under contract, including notification days, divided by the total number of days in the month when termination is effective.

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|:---|:---|
| Alpha-Matador Consulting Agreement 10-2022 | ![init01.jpg](init01.jpg) |

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(b) Company will issue Consultant Two Thousand (2,000) shares per month of its common stock, valued per share at two-week Volume Weighted Average Price ("VWAP") at date of issuance and bearing a legend restricting sale for six (6) months from the date of issuance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Actual stock issuances shall be on a quarterly rather than monthly basis, with the first issuance being on or about October 1, 2022. The stock issuance for the month of October 2022 shall be fifty percent (50%) or One Thousand (1000) shares. In the event of termination of this contract by either party, Consultant will be due the full share issuance earned under this provision for any month worked, including partial months, under this contract for which shares have not previously been issued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Stock shall be issued to:

Jeffrey Wright

P.O. Box 151

Stillwater, OK 74076

Mr. Wright will provide a W-9 and any other necessary information to issuer to facilitate transfer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Following completion of the restriction period and upon request of Consultant, Company will act in good faith to support expeditious removal of the restrictive legend and registration of the shares.

(c) The Parties agree that the remuneration specified above for services provided to the Company are based on 100% of Consultant's time, regardless of the actual hours Consultant spends during any given month. Remuneration specified herein shall not be reduced if Consultant provides less than 100% of Consultant's time.

(d) The Consultant agrees to provide a daily report (the "Production Report") when requested as to the services provided and the projects that the Consultant has worked on, on the Company's behalf, at the request of the President of Company.

(e) Consultant shall have use of a vehicle provided by Company and insured through a policy held by Company ("Company Truck"). The Company shall procure and maintain automobile liability insurance in respect thereof, with such coverage insuring Consultant for bodily injury and property damage. Reimbursement of automobile-related expenses shall be made as soon as practicable. Additionally, neither the provision of in-kind benefits nor the reimbursement of expenses in any one calendar year shall affect the level or amount of in-kind benefits to be provided, or the expenses eligible for reimbursement, in any other calendar year. Consultant shall maintain a log of mileage used on Company Projects. The Company Truck is not to be used for private businesses of Consultant, and is to be made available to other Company representatives from time to time under the direction of the Company's President. Currently the Company Truck is a 2021 Chevrolet Silverado.

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|:---|:---|
| Alpha-Matador Consulting Agreement 10-2022 | ![init01.jpg](init01.jpg) |

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&nbsp;&nbsp;&nbsp;&nbsp;**3.** **Expenses** 

The Company shall reimburse Consultant for all reasonable and necessary expenses incurred by Consultant in carrying out its duties under this Agreement including travel. Consultant shall submit related receipts and documentation with his request for reimbursement.

&nbsp;&nbsp;&nbsp;&nbsp;**4.** **Renewal; Termination** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) This Agreement shall continue in effect for 12 months and thereafter, if not then terminated, shall be renewed monthly until terminated by the Parties. Either the Company or the Consultant may terminate this Agreement by giving the other party fifteen (15) days written notice. However, termination of Consultant by the Company shall not relieve the Company of its financial obligations to Consultant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Termination or expiration of this Agreement shall not extinguish any rights of compensation that shall accrue prior to the termination.

&nbsp;&nbsp;&nbsp;&nbsp;**5.** **Confidential Information** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "Confidential Information," as used in this Section 5, means information that is not generally known and that is proprietary to the Company or the Consultant or that the either Party is obligated to treat as proprietary. This information includes, without limitation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Trade secret information about the Company and its products; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Information concerning the Company's business as the Company has conducted it since the Company's inConsultantCompany or as it may conduct it in the future; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Information concerning any of the Company's past, current, or possible future products, including (without limitation) information about the Company's research, development, engineering, purchasing, manufacturing, accounting, marketing, selling, or leasing efforts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Information of Consultant including Consultant Intellectual Property and Consultant Data and Data Modifications.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) "Confidential Information" as herein defined shall include Consultant Intellectual Property obtained either prior to Consultant's engagement under this Agreement or obtained by Consultant outside his engagement with Company.. "Confidential Information" shall likewise include Consultant Intellectual Property, Consultant Data and Data Modifications.

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|:---|:---|
| Alpha-Matador Consulting Agreement 10-2022 | ![init01.jpg](init01.jpg) |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Any information that Consultant reasonably considers Confidential Information, or that the Company or Consultant treats as Confidential Information, due to its unique nature purchased or developed by the Company or Consultant, not available in the public domain or licensed or copyrighted information will be presumed to be Confidential Information (whether Consultant or others originated it and regardless of how obtained).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Except as required in its duties to the Company, Consultant will never, either during or after the term of this Agreement, use or disclose such aforedescribed Confidential Information to any person not authorized by the Company to receive it. Unless authorized in writing by Consultant, Company will never disclose Consultant Intellectual Property to third parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) In the event Consultant or Company becomes legally compelled to disclose such aforedescribed Confidential Information, the obligated Party shall provide the other Party with prompt notice so a protective order or other appropriate remedy may be sought. In any event, the obligated Party shall furnish only that portion of the Confidential Information which is legally required and shall exercise commercially reasonable efforts, at the Company's expense, to obtain a protective order or other reliable assurance that confidential treatment shall be accorded to the furnished Confidential Information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) If this Agreement is terminated, Consultant will promptly turn over to the Company all records and any compositions, articles, devices, apparatus and other items that disclose, describe, or embody Confidential Information, including all copies, reproductions, and specimens of the Confidential Information in its possession, regardless of who prepared them. If this Agreement is terminated, Company agrees to terminate all use of Consultant Intellectual Property and destroy or retrun to Consultant any Consultant Intellectual Property in its possession or control. The rights of the Parties set forth in this Section 5 are in addition to any rights of the Parties with respect to protection of trade secrets or confidential information arising out of the common or statutory laws of the State of Oklahoma or any other state or any country wherein Parties may from time to time perform services pursuant to this Agreement. This Section 5 shall survive the termination or expiration of this Agreement.

**6**

&nbsp;&nbsp;&nbsp;&nbsp;**6.** **False or Misleading Information** 

The Company warrants that it will provide Consultant with accurate financial, corporate, and other data required by Consultant and necessary for full disclosure of all facts relevant to any efforts required of Consultant under this Agreement. Such information shall be furnished promptly upon request. If the Company fails to provide such information, or if any information provided by the Company to Consultant shall be false or misleading, or if the Company omits or fails to provide or withholds relevant material information to Consultant, then, in such event, Consultant may terminate the Agreement and any and all fees paid or due hereunder will be retained by Consultant as liquidated damages and this Agreement shall be null and void and Consultant shall have no further obligation hereunder. Further, by execution of this Agreement, the Company hereby indemnifies Consultant from any and all costs for expenses or damages incurred, and holds Consultant harmless from any and all claims and/or actions that may arise out of providing false or misleading information or by omitting relevant information in connection with the efforts required of Consultant under this Agreement.

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|:---|:---|
| Alpha-Matador Consulting Agreement 10-2022 | ![init01.jpg](init01.jpg) |

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&nbsp;&nbsp;&nbsp;&nbsp;**7.** **Consultant** ' **s Best Efforts and No Warranty of Information** 

Consultant shall use its best efforts to use reliable information and best practices associated with the oil and gas business. However, Consultant makes no warranty as to the completeness or interpretation of such information, nor does Consultant warrant the information with regard to errors or omissions contained therein. Any reserve estimates, price calculations, price forecasts, exploration potential predictions or similar information provided by Consultant are, or may well be estimates only, and should not be considered predictions of actual results.

&nbsp;&nbsp;&nbsp;&nbsp;**8.** **Miscellaneous** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Successors and Assigns</u>. This Agreement is binding on and inures to the benefit of the Parties. Parties cannot assign obligations due under this Agreement without the other Party's written consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Modification</u>. This Agreement may be modified or amended only by a writing signed by both the Company and Consultant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Governing Law</u>. The laws of Oklahoma will govern the validity, construction, and performance of this Agreement. Any legal proceeding related to this Agreement will be brought in an appropriate Oklahoma court, and both the Company and Consultant hereby consent to the exclusive jurisdiction of that court for this purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Construction</u>. Wherever possible, each provision of this Agreement will be interpreted so that it is valid under the applicable law. If any provision of this Agreement is to any extent invalid under the applicable law, that provision will still be effective to the extent it remains valid. The remainder of this Agreement also will continue to be valid, and the entire Agreement will continue to be valid in other jurisdictions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Waivers</u>. No failure or delay by either the Company or Consultant in exercising any right or remedy under this Agreement will waive any provision of the Agreement, nor will any single or partial exercise by either the Company or Consultant of any right or remedy under this Agreement preclude either of them from otherwise or further exercising these rights or remedies, or any other rights or remedies granted by any law or any related document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Captions</u>. The headings in this Agreement are for convenience only and do not affect this Agreement's interpretation.

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|:---|:---|
| Alpha-Matador Consulting Agreement 10-2022 | ![init01.jpg](init01.jpg) |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Entire Agreement</u>. This Agreement supersedes all previous and contemporaneous oral negotiations, commitments, writings, and understandings between the Parties concerning the matters in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Notices</u>. All notices and other communications required or permitted under this Agreement shall be in writing and sent by registered first-class mail, postage prepaid, and shall be effective five days after mailing to the addresses stated below. These addresses may be changed at any time by like notice.

In the case of the Company:

Alpha Energy, LLC

Attention: Jay Leaver, President

14143 Denver West Blvd., #100

Golden, Colorado 80401

Ph: 720-212-5489

Email: jleaver@alpha-energy.us

In the case of Consultant:

Matador Wellsite Consulting, LLC

Attention: Jeffrey Wright

P.O. Box 151

Stillwater, Oklahoma 74076

Ph. 405-334-3182

E-mail: jeffreywright2017@gmail.com

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Indemnification</u>. Company agrees to indemnify and hold harmless Consultant from any and all claims, actions, liabilities, costs, expenses, including attorney fees arising from claims made against Consultant in connection with Company's possession or use of advice, guidance, materials, information, data or other services provided by Consultant under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Counterparts.</u> This Agreement may be executed by signing an original or a counterpart thereof. If this Agreement is executed in counterparts, all counterparts taken together shall have the same effect as if all the Parties had signed the same instrument.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>Conflicts of Interest</u>. Company acknowledges that Consultant is engaged in the business of providing petroleum consulting for other oil and gas companies within the United State and Canada. In the event Consultant is requested by Company to provide advice and guidance on or about geographical areas that may create a potential conflict of interest between Consultant's other business matters and the Company's operations, Consultant shall not be required by Company to render advice and guidance on such an area. Company and Consultant shall use their best efforts to notify each other of any potential conflicts of interest. In any event, Consultant's general knowledge that Company plans to engage, or is actively engaging, in oil and gas exploration within an area shall in no way preclude Consultant, or Consultant's business entities, from performing land services or consulting for other oil and gas companies within the same area.

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|:---|:---|
| Alpha-Matador Consulting Agreement 10-2022 | ![init01.jpg](init01.jpg) |

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the 15th day of October 2022.

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| | | | |
|:---|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;"The Company" |  | "Consultant" |
|  | &nbsp;&nbsp;&nbsp;**ALPHA ENERGY, INC**. |  | **MATADOR WELLSITE CONSULTING** |
| By: | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ![leaver.jpg](leaver.jpg) | &nbsp;&nbsp;&nbsp;By: | &nbsp;&nbsp;&nbsp; ![wright.jpg](wright.jpg) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Jay Leaver, President |  |  |

---

------

**Exhibit A**

**Job Description- Operations Manager**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Consultant has specific experience in the fields of petroleum operations, production optimization, and field operations relevant to oil and gas projects. Consultant will make this expertise reasonably available to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Consultant will make specific recommendations for additional consultants or vendor services necessary to continue intelligent pursuit of development of the Alpha-Matador AMI. Consultant will not make such recommendations without due consideration for the needs of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Consultant shall participate in the development and analysis of potential acquisitions and/or divestitures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. Consultant may take on other reasonable duties within his expertise from time to time as directed by the Company's President, assuming such activities do not conflict with Consultant's other interests.

---

| | |
|:---|:---|
| Alpha-Matador Consulting Agreement 10-2022 | ![init01.jpg](init01.jpg) |

---

## Exhibit 10.14

**Exhibit 10.14**

**<u>FIRST AMENDMENT TO INDIVIDUAL TRANSACTION CONFIRMATION</u>**

This FIRST AMENDMENT TO INDIVIDUAL TRANSACTION CONFIRMATION ("Amendment") is entered into as of this 1<sup>st</sup> day of November, 2022 ("Effective Date"), by and between **ETC TEXAS PIPELINE, LTD.**, a Texas limited partnership ("Gatherer"), and **ALPHA ENERGY, INC.** ("Producer").

WHEREAS, Producer and Gatherer entered into that certain Individual Transaction Confirmation dated August 1, 2022, Gatherer's Contract Number 2153-101 (the "Individual Transaction Confirmation"), subject to and governed by the Gathering and Processing Agreement between Producer and Gatherer dated August 1, 2022, Gatherer's Contract Number 2153-100 (the "Base Agreement") (the Base Agreement and the Individual Transaction Confirmation, collectively the "Agreement"), covering properties located in Logan County, Oklahoma; and

WHEREAS, Producer and Gatherer desire to amend the Individual Transaction Confirmation as provided herein;

NOW THEREFORE, in consideration of the premises and of the mutual covenants contained herein, Producer and Gatherer agree to amend the Individual Transaction Confirmation as follows:

&nbsp;&nbsp;&nbsp;&nbsp;1. **EXHIBIT** "**A**" to the Individual Transaction Confirmation shall be deleted in its entirety and replaced with the attached **EXHIBIT** "**A** "**REVISION 1**. All references to **EXHIBIT** "**A**" in the Individual Transaction Confirmation will be references to **EXHIBIT** "**A** "**REVISION 1**.

&nbsp;&nbsp;&nbsp;&nbsp;2. **EXHIBIT** "**B**" to the Individual Transaction Confirmation shall be deleted in its entirety and replaced with the attached **EXHIBIT** "**B** "**REVISION 1**. All references to **EXHIBIT** "**B**" in the Individual Transaction Confirmation will be references to **EXHIBIT** "**B** "**REVISION 1**.

&nbsp;&nbsp;&nbsp;&nbsp;3. This Amendment is effective on November 1, 2022.

The Individual Transaction Confirmation is amended to the extent noted herein. In all other respects, it is confirmed and shall continue in full force and effect. To the extent not defined herein, all defined terms shall have the meaning ascribed to them in the Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the date first written above.

---

| | |
|:---|:---|
| **GATHERER:** | **PRODUCER:** |
| **ETC TEXAS PIPELINE, LTD.** | **ALPHA ENERGY, INC.** |
| **By: LG PL, LLC, its general partner** |  |
| ![xxx02.jpg](xxx02.jpg) | ![xxx03.jpg](xxx03.jpg) |

---

![xxx04.jpg](xxx04.jpg)

------

**EXHIBIT** "**A**" **REVISION 1** 

**DEDICATED INTERESTS** 

**TO ITC #2153-101**

**TO THAT CERTAIN**

**GATHERING AND PROCESSING AGREEMENT #2153-100** 

**BETWEEN**

**ALPHA ENERGY, INC. AND**

**ETC TEXAS PIPELINE, LTD. DATED**

**AUGUST 1, 2022**

**<u>DEDICATED INTERESTS</u>**

Producer's Interest in all Gas reserves in, under or attributable to the following Dedicated Acreage, Subject Lease(s) and Subject Well(s):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.**  **<u>DEDICATED ACREAGE</u>** 

Not Applicable

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.**  **<u>SUBJECT LEASE(S)</u>** 

Not Available

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.**  **<u>SUBJECT WELL(S)</u>** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**a.**  **<u>Subject Wells located within the Dedicated Acreage</u>:** 

Not Applicable

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**b.**  **<u>Dedicated Wellbores - Wellbore Dedication Only</u>:** 

---

| | | |
|:---|:---|:---|
| **WELL NAME** | **LOCATION** | **COUNTY / STATE** |
| Logan County 1-1 | Section 1-T17N-R3W | Logan / Oklahoma |
| Logan County 1-31 | Section 1-T17N-R3W | Logan / Oklahoma |
| Logan County 2-2 | Section 2-T17N-R3W | Logan / Oklahoma |
| Logan County 2-4 | Section 2-T17N-R3W | Logan / Oklahoma |
| Logan County 2-9 | Section 2-T17N-R3W | Logan / Oklahoma |
| **\*Logan County 2-20** | **Section 2-T17N-R3W** | **Logan / Oklahoma** |
| Logan County 2-24 | Section 2-T17N-R3W | Logan / Oklahoma |
| **\*Logan County 11-6** | **Section 11-T17N-R3W** | **Logan / Oklahoma** |
| Logan County 11-18 | Section 11-T17N-R3W | Logan / Oklahoma |
| **\*Logan County 11-21** | **Section 11-T17N-R3W** | **Logan / Oklahoma** |

---

![xxx01.jpg](xxx01.jpg)

------

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Logan County 11-23 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11-T17N-R3W | Logan / Oklahoma |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Logan County 11-32 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11-T17N-R3W | Logan / Oklahoma |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Logan County 22-11 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 11-T17N-R3W | Logan / Oklahoma |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Logan County 29-1 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 1-T17N-R3W | Logan / Oklahoma |

---

---

| | |
|:---|:---|
| \*New Well added by this Amendment | ![xxx01.jpg](xxx01.jpg) |

---

------

**EXHIBIT** "**B**" **REVISION 1** 

**RECEIPT POINT(S)** 

**TO ITC #2153-101**

**TO THAT CERTAIN**

**GATHERING AND PROCESSING AGREEMENT #2153-100** 

**BETWEEN**

**ALPHA ENERGY, INC.** 

**AND**

**ETC TEXAS PIPELINE, LTD.** 

**DATED**

**AUGUST 1, 2022**

**<u>RECEIPT POINT(S)</u>**

---

| | | | |
|:---|:---|:---|:---|
| **METER NAME** | **METER**<br> **NUMBER** | **LOCATION** | **COUNTY / STATE** |
| Logan County 1-1 | 090-22101 | Section 1-T17N-R3W | Logan / Oklahoma |
| Logan County 1-31 | 090-22170 | Section 1-T17N-R3W | Logan / Oklahoma |
| Logan County 2-2 | 090-21986 | Section 2-T17N-R3W | Logan / Oklahoma |
| Logan County 2-4 | 090-21991 | Section 2-T17N-R3W | Logan / Oklahoma |
| Logan County 2-9 | 090-21993 | Section 2-T17N-R3W | Logan / Oklahoma |
| **\*Logan County 2-20** | **090-22041** | **Section 2-T17N-R3W** | **Logan / Oklahoma** |
| Logan County 2-24 | 090-22036 | Section 2-T17N-R3W | Logan / Oklahoma |
| **\*Logan County 11-6** | **090-21992** | **Section 11-T17N-R3W** | **Logan / Oklahoma** |
| Logan County 11-18 | 090-22030 | Section 11-T17N-R3W | Logan / Oklahoma |
| **\*Logan County 11-21** | **090-22050** | **Section 11-T17N-R3W** | **Logan / Oklahoma** |
| Logan County 11-23 | 090-22061 | Section 11-T17N-R3W | Logan / Oklahoma |
| Logan County 11-32 | 090-22112 | Section 11-T17N-R3W | Logan / Oklahoma |
| Logan County 22-11 | 090-22084 | Section 11-T17N-R3W | Logan / Oklahoma |
| Logan County 29-1 | 090-22141 | Section 1-T17N-R3W | Logan / Oklahoma |

---

---

| | |
|:---|:---|
| \*New Well added by this Amendment | ![xxx01.jpg](xxx01.jpg) |

---

------

**GATHERING AND PROCESSING AGREEMENT** 

**BETWEEN**

**ALPHA ENERGY, INC.** 

**AND**

**ETC TEXAS PIPELINE, LTD.** 

**DATED**

**AUGUST 1, 2022**

**CONTRACT NUMBER 2153-100**

------

**TABLE OF CONTENTS**

------

**1.** **DEFINITIONS** **1** 

**2.** **SCOPE OF AGREEMENT** **8** 

**3.** **FEE(S) & FL&U** **9** 

**4.** **COMMITMENTS AND RESERVATIONS** **9** 

**5.** **PROCESSING** **12** 

**6.** **QUANTITY** **14** 

**7.** **QUALITY** **15** 

**8.** **MEASUREMENT** **17** 

**9.** **BILLING** **20** 

**10.** **WARRANTY** **21** 

**11.** **POSSESSION AND TITLE OF GAS** **21** 

**12.** **TAXES AND ROYALTIES** **22** 

**13.** **REMEDIES/LIABILITY** **22** 

**14.** **CREDIT ASSURANCE** **23** 

**15.** **NOTICES** **24** 

**16.** **FORCE MAJEURE** **25** 

**17.** **TERM AND TERMINATION** **26** 

**18.** **REPRESENTATIONS AND WARRANTIES** **27** 

**19.** **MISCELLANEOUS** **28** 

**EXHIBITS**

**EXHIBIT** "**A**" – **EXAMPLE OF INDIVIDUAL TRANSACTION CONFIRMATION** 

**EXHIBIT** "**B**" – **GAS LIFT GAS DELIVERY AND SALES TERMS**

**EXHIBIT** "**C**" – **RESIDUE GAS NOMINATIONS AND IMBALANCE PROVISIONS** 

**EXHIBIT** "**D**" – **TREATING FEE(S) AND FUEL(S)**

**EXHIBIT** "**E**" – **FORM OF MEMORANDUM OF GATHERING AND PROCESSING AGREEMENT**

![logo01.jpg](logo01.jpg)

i

------

**GATHERING AND PROCESSING AGREEMENT**

**ETC TEXAS PIPELINE, LTD.,** a Texas limited partnership ("<u>Gatherer</u>"), and **ALPHA ENERGY, INC.** ("Producer"), enter into this Gathering and Processing Agreement (together with all Transaction(s), collectively, this "<u>Agreement</u>") effective as of August 1, 2022 (the "<u>Effective</u> <u>Date</u>").

**W I T N E S S E T H**

WHEREAS, Producer owns or controls quantities of Gas produced from certain oil and gas properties for which Producer will require gathering, processing, and/or other services; and

WHEREAS, Gatherer desires to provide such services to Producer, and Producer desires for Gatherer to provide the same for Producer's Gas from specified points of receipt;

NOW, THEREFORE, for and in consideration of the premises and mutual covenants herein contained, Producer and Gatherer do hereby stipulate and agree as follows.

**ARTICLE I**

**DEFINITIONS**

1.1 <u>Specific Defined Terms</u>. As used throughout this Agreement including the Exhibits hereto, the following capitalized terms shall have the meanings ascribed below.

"<u>Affiliate</u>" or "<u>Affiliates</u>" means, with respect to any relevant Person, any Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or under common control with such relevant Person. For purposes of this definition, the term "control" (including its derivatives and similar terms) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the relevant Person, whether through the ownership or control of voting interest, by contract or otherwise.

"<u>Allocated Service</u>" means gathering service subject to curtailment only (a) in accordance with applicable Laws and (b) after all Interruptible Service has been curtailed and (c) as required by the operating conditions and capacity of Gatherer's Gathering System.

"<u>Agreement</u>" shall have the meaning set forth in the Preamble.

"<u>Btu</u>" means the amount of energy required to raise the temperature of one pound of pure water one degree Fahrenheit (1°F) from fifty-nine degrees Fahrenheit (59°F) to sixty degrees Fahrenheit (60°F).

"<u>Business Day</u>" means any day except Saturday, Sunday or Federal Reserve Bank holidays.

![logo01.jpg](logo01.jpg)

------

"<u>CCT</u>" means Central Clock Time and is defined as current time in the Central Time Zone taking into consideration the seasonal changes back and forth between Daylight Savings and Standard time.

"<u>Component Plant Products</u>" shall have the meaning set forth in Section 5.2, (3).

"<u>Component Plant Product Percentage of Proceeds</u>" means the portion of the Component Plant Products retained by Producer pursuant to the applicable ITC.

"<u>Component Recovery Factor</u>" means the fixed percentage of each Component Plant Product deemed to be recovered at the Plant pursuant to this Agreement and listed in the applicable ITC.

"<u>Condensate</u>" means any liquid hydrocarbon produced from a Subject Well which is measured and delivered into the Gathering System at a Receipt Point as Gas but during transportation in the Gathering System experiences a phase change to a liquid state and is subsequently recovered as a liquid.

"<u>Contract Pressure Base</u>" means a pressure of fourteen and sixty-five one-hundredths (14.65) Psia or fourteen and seventy-three one-hundredths (14.73) Psia, as determined by Gatherer.

"<u>Contract Temperature Base</u>" means a temperature of sixty degrees Fahrenheit (60°F).

"<u>Contract Year</u>" means the three hundred and sixty-five (365) consecutive Days (or three hundred and sixty-six (366) consecutive Days if Contract Year includes a leap year (February 29)) beginning on the first Day of the Month subsequent to the Initial Delivery Date, or if the Initial Delivery Date occurs on the first Day of a Month, then such first Day, and each of the anniversaries thereafter.

"<u>Cricondentherm</u>" means the maximum temperature above which liquid cannot be formed regardless of pressure. The corresponding pressure is called "<u>Cricondentherm Pressure</u>".

"<u>Day</u>" means a period of twenty-four (24) consecutive hours, beginning at 9:00 a.m. CCT on any calendar day.

"<u>Dedicated Acreage</u>" means the area described in and depicted on **Exhibit** "**A**" of the applicable ITC.

"<u>Dedicated Gas</u>" shall have the meaning set forth in Section 4.1.

"<u>Dedicated Interests</u>" shall have the meaning set forth in Section 4.1.

"<u>Dedicated Wellbore(s)</u>" means the Subject Well(s) described in and identified with the designation of "Wellbore Dedication Only" in **Exhibit** "**A**" of the applicable ITC.

"<u>Dedication</u>" shall have the meaning set forth in Section 4.1.

![logo01.jpg](logo01.jpg)

------

"<u>Delivery Point(s)</u>" means the point(s) identified in the applicable ITC at which Gatherer is to deliver and purchase Producer's Residue Gas and Producer's Settlement Gallons.

"<u>Downstream Transporter</u>" means any pipeline directly connected downstream of the Delivery Point(s).

"<u>Effective Date</u>" shall have the meaning set forth in the Preamble.

"<u>Event of Default</u>" or "<u>Default</u>" means the occurrence of any of the following events, circumstances or conditions: (i) failure by either Party to materially perform or comply with any material agreement, covenant, obligation or other provision contained in this Agreement when either (A) such failure has not been cured within the greater of a reasonable period of time or thirty (30) Days; in each case, following the Party in Default receiving written notice thereof from the Party not in Default (other than a Default which occurs because such Party is rightfully withholding performance in response to the other Party's failure to perform), or (B) an effort to remedy such failure has not been commenced within such period following such written notice and continued to be diligently prosecuted, with such measures reasonably expected to cure any such Default; (ii) the entry of any Party into voluntary or involuntary bankruptcy, receivership or similar protective proceedings; (iii) the material inaccuracy or breach of any representation or warranty contained herein when such failure either has not been cured within the greater of a reasonable period of time or thirty (30) Days following receipt of written notice thereof by the Party in Default, or (iv) failure to pay any amounts owed pursuant to this Agreement within thirty (30) Days after the applicable due date, other than amounts disputed in good faith pursuant to the provisions of Section 9.2.

"<u>Facilities</u>" means those assets owned or controlled by Gatherer to perform the services for Producer as provided for in this Agreement, which may include but not be limited to Gas measurement, providing Gas Lift Gas and Gas Lift Meter(s), gathering, compression, treating, dehydration, processing, and delivery equipment currently owned and operated by Gatherer, its Affiliates or unaffiliated third parties, or as may be constructed or used by Gatherer pursuant to this Agreement or as Gatherer deems otherwise necessary to fulfill its obligations hereunder.

"<u>FL&U</u>" means the combination of Fuel, Lost and Unaccounted-for Gas on the Gathering System.

"<u>Fee(s)</u>" shall have the meaning set forth in Section 3.1.

"<u>Fuel</u>" means the quantity of Gas, in MMBtu, used by Gatherer for fuel in the provision of services such as gathering, conditioning, treating, dehydrating and/or compressing the Gas on the Gathering System.

"<u>Force Majeure</u>" shall have the meaning set forth in Section 16.1.

"<u>Gas</u>" means methane and other gaseous hydrocarbons, including gaseous combustible, noncombustible, and inert elements, compounds, components or mixtures thereof and liquefiable hydrocarbons in the vapor stream produced at the wellhead, including gas separated or flashed from oil or Condensate after production.

![logo01.jpg](logo01.jpg)

------

"<u>Gas Lift Gas</u>" and "<u>Gas Lift Meter(s)</u>" shall be as defined in **Exhibit** "**B**" hereto, as applicable.

"<u>Gathering System</u>" means the existing Gas gathering pipeline system owned and operated by Gatherer and any extensions thereof to connect the Subject Well(s) as may be constructed by Gatherer or Gatherer's Affiliates, including, but not limited to those as described in the applicable ITC.

"<u>Gross Heating Value</u>" means the number of Btus produced by the complete, ideal combustion of a cubic foot of Gas, at the Contract Temperature Base and Contract Pressure Base, excluding the heating value contribution of hydrogen sulfide, as calculated in accordance with Gas Processors Association Standard 2172. Gross Heating Value will be assumed dry at the Contract Pressure Base and Contract Temperature Base ("Dry at Base"), unless otherwise specified in the applicable ITC.

"<u>I&E Easement</u>" shall have the meaning set forth in Section 19.16.

"<u>Individual Transaction Confirmation</u>" or "<u>ITC</u>" means an effective and unexpired agreement documented by written means, evidencing the specific terms of a Transaction, which may be in any form adequate at law, but which shall be subject to the terms and conditions of this Gas Gathering and Processing Agreement ("Base Agreement") and include information materially similar to that contained in **Exhibit** "**A**".

"<u>Initial Delivery Date</u>" means the first date on which Producer delivers any Gas to Gatherer at the Receipt Point(s) pursuant to the applicable ITC.

"<u>Interruptible</u>" or "<u>Interruptible Service</u>" means that Gatherer, in its sole and unfettered discretion, shall have the right to interrupt, curtail or suspend the services contemplated hereunder at any time and from time to time without any liability to Producer by reason thereof.

"<u>Laws</u>" means any laws, rules, regulations, decrees and orders of the United States of America and all other governmental bodies, agencies or other authorities having jurisdiction over or affecting the provisions contained in or the Transactions contemplated by this Agreement or the Parties or their operations, whether such Laws now exist or are hereafter amended or enacted.

"<u>Loss</u>" or "<u>Losses</u>" means, unless specifically provided otherwise, all claims, including, but not limited to, those for bodily injury or death, personal injury, illness, disease, maintenance, cure, loss of parental or spousal consortium, loss of support, wrongful death, property damage and wrongful termination of employment, damages, liabilities, losses, demands, liens, encumbrances, fines, penalties, costs for removal of wreck/debris, causes of action of any kind (including actions in rem or in personam), obligations, costs, judgments, interest and awards (including payment of reasonable attorneys' fees and costs of litigation) or amounts, of any kind or character (except punitive or exemplary damages), whether under judicial proceedings, administrative proceedings or otherwise, or conditions in the premises of or attributable to any Person or Persons or any Party or Parties, breach of representation or warranty (expressed or implied), under any theory of tort, contract, breach of contract (including any Losses which arise by reason of indemnification or assumption of liability contained in other contracts entered into by Gatherer or Producer) arising out of, or incident to or in connection with the Agreement or the performance of work, services or operations contemplated under the Agreement.

![logo01.jpg](logo01.jpg)

------

"<u>Lost and Unaccounted-for Gas</u>" or "<u>L&U</u>" means that volume of Gas, in MMBtu received by Gatherer which is released and/or lost through piping, equipment, or operations, which cannot be accounted for, or is vented, all on the Gathering System.

"<u>Mcf</u>" means one thousand (1,000) cubic feet of Gas measured at the Contract Pressure Base and the Contract Temperature Base.

"<u>Minimum Production</u>" means actual deliveries of Gas measured from a Receipt Point that are at least two hundred and fifty (250) Mcf per month.

"<u>MMBtu</u>" means one million (1,000,000) Btu.

"<u>MMscf</u>" means one million (1,000,000) standard cubic feet, at the Contract Pressure Base and the Contract Temperature Base.

"<u>Month</u>" means a period beginning at 9:00 a.m. CCT on the first Day of the calendar month and ending at 9:00 a.m. CCT on the first Day of the next succeeding calendar month.

"<u>New Taxes</u>" means (i) any Taxes enacted and effective after the Effective Date, including that portion of any Taxes or New Taxes that constitutes an increase, or (ii) any Laws, or interpretations thereof, enacted and effective after the Effective Date resulting in the application of any Taxes to a new or different class of parties.

"<u>NGL</u>" or "<u>Natural Gas Liquids</u>" means the demethanized mix of liquefiable hydrocarbons and nonhydrocarbon substances that are condensed or absorbed from, or separated out of natural gas, including ethane, propane, isobutane, normal butane, natural gasoline (pentanes and heavier hydrocarbons) and only those limited quantities of methane and carbon dioxide incidentally recovered with the hydrocarbons. References to Plant Products in this Agreement shall be considered references to Natural Gas Liquids.

"<u>Non-Specification Gas</u>" shall have the meaning set forth in Section 7.3.

"<u>Party</u>" means, individually, either Gatherer or Producer, collectively referred to as the "<u>Parties</u>".

"<u>Person</u>" or "<u>Persons</u>" means any individual or entity, including, without limitation, any corporation, limited liability company, joint stock company, general or limited partnership, or government authority (including any agency or administrative group thereof).

"<u>Plant</u>" means the turbo-expander, cryogenic Gas processing plant(s) identified in the applicable ITC, from time to time utilized by Gatherer or Gatherer's nominee for the purpose of processing Gas delivered from the Gathering System, whether such plant(s) consist of one (1) or more turbo-expander, cryogenic Gas processing plant(s), or portions thereof, and recovering a raw unfractionated liquid hydrocarbon mix.

![logo01.jpg](logo01.jpg)

------

"<u>Plant Inlet Volume</u>" shall have the meaning set forth in Section 5.2, (1).

"<u>Plant Products</u>" shall have the meaning set forth in Section 5.2, (2).

"<u>Plant Product Shrinkage</u>" shall have the meaning set forth in Section 5.2, (5).

"<u>Plant Thermal Reduction</u>" or "<u>PTR</u>" means the sum of the Plant Product Shrinkage and fixed Process Fuel as set forth in the applicable ITC, in MMBtu.

"<u>Process Fuel</u>" means Producer's share of Plant fuel (including electricity), flare and unaccounted-for losses.

"<u>Producer</u><u>'</u><u>s Interest</u>" means, in the context of the Dedicated Acreage, Subject Lease(s) and Subject Well(s), as applicable, all rights, title and interests that Producer and/or any of its Affiliates now or hereinafter owns, operates, controls or acquires in Gas reserves in, under, produced from or attributable to such Dedicated Acreage, Subject Lease(s) and/or Subject Well(s), whether arising from fee ownership, working interest ownership, mineral rights or ownership, leasehold rights or ownership, farm-out or arising from any pooling, unitization or communitization, all interests in any wells, whether now existing or drilled hereafter, on or completed within any of the Subject Lease(s), or within any such pool, communitized area or unit which includes all or any part of the Subject Lease(s), even though Producer's Interest may be incorrectly or incompletely stated, all as the same shall be enlarged by the discharge of any burdens or by the removal of any charges or encumbrances to which any of same may be subject as of the Effective Date, and any and all replacements, renewals and extensions or amendments of any of the same, together with such rights of ingress and egress in, under, upon, across, and through the property related or subject to such interests, the rights to construct, use, inspect, repair, and operate any facilities consistent with such interests and/or the applicable ITC, and such rights as are required for or related to Gatherer's full use and enjoyment of the property consistent with Producer's dedication of the Dedicated Interests herein. For the avoidance of doubt, to the extent that the Dedication includes a dedication of a Dedicated Wellbore(s), then, and with respect only to the Dedication as it applies to such Dedicated Wellbore(s), Producer's Interest shall mean all right, title and interest that Producer and/or any of its Affiliates now or hereinafter owns, controls or acquires in such Dedicated Wellbore(s) and in the Gas reserves in, under and attributable to those certain Subject Lease(s) as may be included in the drilling and production or other unit(s) applicable to such Dedicated Wellbore(s) insofar and only insofar as to Gas produced from such Dedicated Wellbore(s).

![logo01.jpg](logo01.jpg)

------

"<u>Producer</u><u>'</u><u>s Settlement Gallons</u>" shall have the meaning set forth in Section 5.2, (8).

"<u>Psia</u>" means pounds per square inch absolute.

"<u>Psig</u>" means pounds per square inch gauge.

"<u>Quality Specifications</u>" means the Gas quality specifications set forth in Section 7.1.

"<u>Receipt Point(s)</u>" means the point(s) identified in the applicable ITC at which Producer is to deliver Producer's Gas, and Gatherer is to receive Producer's Gas, into the Gathering System at the outlet of Gatherer's measurement Facilities.

"<u>Residue Gas</u>" shall have the meaning set forth in Section 5.2, (6).

"<u>Residue Gas Percentage of Proceeds</u>" means the portion of the Residue Gas retained by Producer pursuant to the applicable ITC.

"<u>Stated Rate</u>" means, for any date, an annual rate of interest (compounded daily) equal to the lesser of (a) two percent (2%) over the per annum rate of interest announced as the "prime rate" for commercial loans posted from time to time by Citibank, N.A. (New York, New York office) or its successor or a mutually agreed substitute bank, or (b) the maximum lawful interest rate then in effect under applicable law.

"<u>Subject Lease(s)</u>" means all leaseholds and servitudes, royalties, overriding royalties, other expense and non-expense bearing interests, carried interests, fee interests or other real property interests in lands located within the Dedicated Area (or in the absence of an acreage dedication under an ITC, are applicable to the Dedicated Wellbore(s)).

"<u>Subject Well(s)</u>" means (i) all well(s) now or hereafter drilled on lands included within the Dedicated Acreage that are productive of Gas from any formations that are, or at any time during the term of this Agreement have been, operated by Producer or its Affiliates, including the wells set forth on **Exhibit** "**A**" of the applicable ITC, together with all leaseholds and servitudes, working interests, royalties, overriding royalties, other expense and non-expense bearing interests, carried interests, fee interests or other real property interests in, attributable to, or associated with such wells, and (ii) the well(s) labeled as "Wellbore Dedication Only" set forth on **Exhibit** "**A**" of the applicable ITC.

"<u>Take-in-Kind</u>" means Producer has elected to cease the sale of one hundred percent (100%) of Producer's Residue Gas, attributable to a given ITC, to Gatherer hereunder, and to accept full responsibility for the marketing and sale of the same, in which case Gatherer's responsibility shall be limited to redelivery of the same to the Delivery Point(s).

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"<u>Taxes</u>" means any or all ad valorem, property, occupation, severance, production, extraction, first use, conservation, Btu or energy, gathering, transport, pipeline, processing, utility, gross receipts, Gas or oil revenue, Gas, NGL or oil import, privilege, sales, use, consumption, excise, lease, transaction, and other or New Taxes, governmental charges, licenses, fees, permits, and assessments, or increases therein, other than taxes based on or assessed against net income or net worth.

"<u>Theoretical Gallons</u>" shall have the meaning set forth in Section 5.2, (4).

"<u>Thermal Content</u>" means the product of a volume of Gas and the Gross Heating Value of such Gas, adjusted to the Contract Pressure Base, and expressed in dekatherm or MMBtu.

"<u>Transaction</u>" means any agreement (including that set forth in an ITC) and any amendment, modification, or supplement thereof made subject to and in accordance herewith for the gathering and processing of Gas or provision of other services to be performed hereunder.

"<u>Transportation and Fractionation</u>" or "<u>T&F</u>" means the transportation and fractionation Fee(s) attributable to Producer's Settlement Gallons as set forth in the applicable ITC.

1.2 <u>Other Defined Terms</u>. Other capitalized terms used in this Agreement and not defined in Section 1.1 above shall have the meanings ascribed to them throughout this Agreement.

**ARTICLE II**

**SCOPE OF AGREEMENT**

2.1 <u>Scope of Agreement</u>. Gatherer and Producer from time to time during the term hereof may, but are not obligated to, enter into Transactions for the gathering, processing and other mutually agreeable services for which this Agreement shall apply. Each Transaction shall be effectuated and evidenced as set forth in this Article II and shall constitute a part of this Agreement and all Transactions, together with this Agreement, shall constitute a single integrated agreement. Each Transaction shall be construed as one with this Agreement and any discrepancy or conflict between any terms or provisions contained in this Agreement and any terms or provisions contained in an ITC shall be resolved in favor of the ITC.

2.2 <u>Tender of Producer</u><u>'</u><u>s Residue Gas</u>. In the event Producer is electing to Take-in- Kind its Residue Gas, Producer shall tender Producer's Gas to Gatherer at the Receipt Point(s) during the term of this Agreement, and Gatherer shall redeliver Producer's Residue Gas at the Delivery Point(s), provided that Producer has properly scheduled the same in accordance with Gatherer's (or its Affiliates') scheduling procedures set forth in **Exhibit** "**C**" hereof, as applicable. Producer shall also comply with any nomination requirements of downstream Delivery Point(s) for Producer's Residue Gas.

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2.3 <u>Facilities Expansion</u>. Except as set forth in an ITC, Gatherer shall not be obligated to add to or modify its Facilities or expand the capacity of the Gathering System or Plant in any manner in order to provide services to Producer, including, but not limited to providing conditioning, treating, dehydration, compression, processing, or other services or associated facilities in order to receive Gas at an existing or new Receipt Point(s). Producer may request, in writing, that Gatherer expand Facilities or add new Receipt Point(s) or Delivery Point(s) or provide additional services. Gatherer shall determine, in its sole discretion, whether it will construct the Facilities necessary to provide such requested services. In the event Gatherer agrees to provide such services, then Gatherer shall have the right to re-determine the Fee(s) to be charged hereunder and/or to establish the Fee(s) for such additional services. Producer shall install and operate or cause the installation and operation of all Facilities necessary to deliver Producer's Gas to Gatherer at the Receipt Point(s).

2.4 <u>Maintenance of Facilities</u>. Gatherer agrees to maintain its Facilities for any Receipt Point(s) that provides Minimum Production. If the actual deliveries measured for such Receipt Point(s) should total less than the Minimum Production, Gatherer shall have the option to either (i) disconnect and remove its Facilities from the Receipt Point and release each well upstream of such Receipt Point as to the then producing interval, from this Agreement, (ii) connect and receive the Gas from such well(s) at a different Receipt Point(s) at Producer's cost, or (iii) continue to maintain such Receipt Point(s) and charge Producer a Minimum Production fee per Month as shown on the applicable ITC.

**ARTICLE III**

**FEE(S) & FL&U**

3.1 <u>Fee(s)</u>. Any fee(s) to be paid by Producer to Gatherer for the quantities of Gas delivered by Producer and received for gathering, processing and/or other services provided by Gatherer hereunder shall be as set forth on the ITC (the "<u>Fee(s)</u>").

3.2 <u>FL&U & Process Fuel</u>. In addition to the Fee(s), Producer shall convey to Gatherer at the Receipt Point(s) Producer's fixed quantity of FL&U & Process Fuel as stated in the ITC. Title to the FL&U and Process Fuel shall vest in Gatherer at the Receipt Point(s) at no cost to Gatherer.

**ARTICLE IV**

**COMMITMENTS AND RESERVATIONS**

4.1 <u>Commitment of Producer</u>. Subject to Section 4.2 below and except as otherwise stated on the applicable ITC, Producer hereby (a) exclusively DEDICATES AND COMMITS to Gatherer (i) all Producer's Interest now owned or hereafter acquired by Producer and/or its Affiliates in all Gas reserves in, under or attributable to the Dedicated Acreage, the Subject Lease(s) and the Subject Well(s) (the "<u>Dedicated Interests</u>") and (ii) all Gas now owned or otherwise controlled by Producer and/or its Affiliates that is produced from the Dedicated Interests or lands pooled or unitized therewith ("<u>Dedicated Gas</u>"), (b) GRANTS, TRANSFERS, and CONVEYS to Gatherer, from and out of Producer's and its Affiliates' real property rights in the Dedicated Interests, the sole and exclusive right to perform gathering, processing, and/or other services hereunder with respect to the Dedicated Interests and Dedicated Gas, and (c) further agrees to exclusively deliver, or cause to be delivered, to Gatherer, at the Receipt Point(s) all Dedicated Gas as and when produced (the foregoing dedications, conveyances and agreements described in clauses (a) through (c), together with the I&E Easement, collectively, the "<u>Dedication</u>").

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With respect to all of the Dedicated Interests and Dedicated Gas, the Dedication shall be set forth in each applicable ITC, and the Dedication provisions of this Article IV shall apply for the term of the applicable ITC, and any extension thereof. The Dedication shall constitute a covenant running with the land and the Dedicated Interests, as a benefit and a burden on Producer's title thereto, and running with the Gathering System, as a benefit to and a burden on Gatherer's title thereto, and inuring to the benefit of assignees of, and successors-in-interest to, the Dedicated Interests and the Gathering System, as applicable. The provisions of this Article IV shall further be equitable servitudes burdening the Dedicated Interests, and the Parties agree that such Dedication and commitment and all of the terms and provisions of this Agreement with respect to any Dedicated Interest existing as of the Execution Date shall be deemed fully vested, and further agree that future interests in the Dedicated Interests shall vest upon Producer's or its Affiliates' acquisition of such Dedicated Interests. The Dedication is intended to be a conveyance, on its own, of a real property interest out of and burdening the Dedicated Acreage, as a covenant running therewith, and shall survive any early termination (or purported termination) hereof that is not expressly provided for herein, and shall thereafter be and remain enforceable by Gatherer and its successors and assigns through equitable remedies, including specific performance. The Parties acknowledge and agree that for the Term of this Agreement, the Dedication and all of the terms and provisions of this Agreement collectively (1) touch and concern the Dedicated Interests, (2) relate to the Dedicated Interests in existence and specifically bind the Parties and their successors and assigns pursuant to this Article IV, (3) are intended to be covenants running with the land, (4) constitute a restrictive covenant and equitable servitudes upon the Dedicated Interests, (5) are contained in a dedication and commitment of a real property interest in the Dedicated Interests, thereby establishing privity of estate, (6) are for the benefit of Producer, Gatherer, and their respective Affiliates, successors, and assigns, and (7) are intended, along with the other terms and conditions of this Agreement, to survive any bankruptcy or insolvency of Producer.

In furtherance of the foregoing, if required by Gatherer (as indicated in the applicable ITC), Producer and Gatherer shall execute and deliver, simultaneously with the execution of this Agreement and any ITC, a recordable Memorandum of Agreement, in the form attached as **Exhibit** "**E**" hereto (individually and collectively, the "<u>Memorandum</u>") to give notice of the Parties' commitments and covenants under this Agreement, which Gatherer shall have the responsibility for filing in the applicable public records; provided, however, in the event the provisions of this Agreement or any ITC are amended, the Parties (or their successors or assigns, as applicable) agree to amend the Memorandum to reflect any such amendment. Upon termination of this Agreement or upon any permanent release of all or part of the Dedicated Interests from the Dedication, Producer and Gatherer shall execute and deliver to Producer, with a copy to Gatherer, simultaneously with such termination, a recordable release of the Memorandum as to the area subject to release, which Producer shall file in the applicable public records. It is the intention of the Parties that the Dedication shall constitute an affirmative burden on a real property interest of Producer in favor of Gatherer and that, notwithstanding any other provision of this Agreement, in order of priority: (x) the terms and provisions of this Agreement shall not be subject to separate and independent rejection under Section 365 of the Bankruptcy Code, and (y) the terms and provisions of this Agreement shall not be subject to rejection under Section 365 of the Bankruptcy Code.

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Further, each Party acknowledges that a breach of the Dedication obligations and covenant running with the land would cause irreparable harm and significant injury to Gatherer. Accordingly, Producer and Gatherer hereby acknowledges that in the event of such a breach of Producer's Dedication obligations, money damages are not an adequate remedy for a breach. Accordingly, the Parties hereby agree that Gatherer and its successors and assigns and Producer will have the right to seek specific performance and/or injunctive relief to enforce the obligations in this Agreement, including, but not limited, to the right to specifically enforce Producer's exclusive Dedication of the Dedicated Interests in addition to any other rights and remedies it may have at law or in equity. Moreover, each of the Parties hereby waives and agrees to be estopped in equity from any argument that the other Party (and its successors and assigns) is not entitled to seek injunctive relief and specific performance.

In the event all or any portion of the Dedicated Interests is subject to a Prior Dedication, then the terms of this Agreement shall not be applicable to the interests covered thereby until such time as Producer's Prior Dedication expires or is terminated. Producer shall not extend a Prior Dedication either actively or, in the case of an evergreen renewal, passively by allowing the term to renew through failure to provide notice of termination. Any Prior Dedication affecting the Dedicated Interests shall be indicated on the applicable ITC.

Producer shall, at its sole risk, cost and expense, equip, install, maintain, own, and operate, or cause to be equipped, installed, maintained, owned and operated, all facilities, gathering lines, and compression where applicable to allow Producer's Gas to enter Gatherer's Facilities against prevailing pressures up to the lesser of any Gatherer pressure specification as provided in an ITC or Gatherer's maximum allowable operating pressure. Such Producer facilities shall include but not be limited to, installation and maintenance of mechanical separation equipment immediately upstream of the Receipt Point(s) with snap acting high liquid level shut-down equipment which Gatherer may inspect from time to time to ensure proper operation of the same. Producer shall not install or allow any third party to install equipment to process Producer's Gas upstream of the Receipt Point(s) other than conventional mechanical separation equipment of a type commonly used in the industry and ambient air coolers to the extent needed to enable Producer to comply with the temperature specification set forth in this Agreement.

4.2 <u>Producer</u><u>'</u><u>s Reservations</u>. Producer hereby expressly reserves the following rights and reasonable quantities of Gas to satisfy same:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The right to use Gas prior to delivery to Gatherer for the following purposes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) For delivery to the "lessor" from whom leases were obtained that Gas which such lessors are entitled to receive in kind from the Subject Well(s) and/or Dedicated Acreage under the terms of the Subject Lease(s); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) For fuel used in the operation of the facilities which Producer may install in order to deliver Gas hereunder in accordance with the terms hereof.

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(b) The right to pool or unitize the Dedicated Area (or any portion thereof) with other lands and leases. In the event of pooling or unitization, this Agreement will cover Producer's interest in the pool or unit and the Gas attributable thereto.

(c) The right to separate the Gas using only mechanical, ambient temperature equipment located at surface production facilities of the Subject Well(s) and/or Dedicated Acreage.

**ARTICLE V**

**PROCESSING**

5.1 Producer, during the term of each applicable ITC, does hereby grant, assign and convey to Gatherer all of its rights to process or cause to be processed for the removal and recovery of all components other than methane, all of the Gas received at the Receipt Point(s).

5.2 For all purposes, unless the context of this Agreement requires otherwise, the following definitions shall be applicable:

(1) "<u>Plant Inlet Volume</u>" shall mean the volume in Mcf or MMBtu, as applicable, of Gas received at a particular Receipt Point, less Gas Lift Gas and FL&U, as fixed in the applicable ITC, in Mcf or MMBtu, as applicable.

(2) "<u>Plant Products</u>" shall mean the unfractionated liquid hydrocarbon mix consisting of (i) ethane, (ii) propane, (iii) iso-butane, (iv) normal butane, and (v) pentanes plus; adsorbed, absorbed or condensed in the Plant from Gas delivered to Gatherer.

(3) "<u>Component Plant Products</u>" shall mean (i) ethane, (ii) propane, (iii) iso- butane, (iv) normal butane, and (v) pentanes plus (including iso-pentane, normal pentane, hexane and hydrocarbon components of higher molecular weight) for the purposes of settlement and allocation hereunder.

(4) "<u>Theoretical Gallons</u>" of a particular Component Plant Product shall mean the result obtained by multiplying the particular Component Plant Product content of a particular Gas stream (expressed in gallons per Mcf) by the Plant Inlet Volume (in Mcf) of that particular stream delivered for processing (the result being expressed in gallons).

(5) "<u>Plant Product Shrinkage</u>" shall mean the heating value equivalent of the Component Plant Products.

(6) "<u>Residue Gas</u>" shall mean that portion of Plant Inlet Volume (in MMBtu) remaining after deducting Plant Product Shrinkage and Process Fuel, as fixed in the applicable ITC.

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(7) "<u>Producer</u><u>'</u><u>s Residue Gas</u>" shall equal the Residue Gas times the Residue Gas Percentage of Proceeds set forth on the applicable ITC.

(8) "<u>Producer</u><u>'</u><u>s Settlement Gallons</u>" shall mean the quantity (in gallons) of a particular Component Plant Product attributable to a particular Receipt Point as determined by multiplying the Theoretical Gallons of the particular Component Plant Product contained in the Plant Inlet Volume attributable to the particular Receipt Point by the Component Recovery Factor, as shown in the applicable ITC, then multiplying by the Component Plant Product Percentage of Proceeds for that particular Component Plant Product, as shown in the applicable ITC.

5.3 <u>Payment for Producer</u><u>'</u><u>s Settlement Gallons</u>. The price paid to Producer by Gatherer for Producer's Settlement Gallons for each Component Plant Product will be set forth in an applicable ITC, less any T&F and/or other Fee(s) as specified in said ITC.

5.4 Plant Product Shrinkage attributable to a particular Receipt Point shall be determined by conversion of the calculated volume of each Component Plant Product attributed to the particular Receipt Point to its respective heating value equivalent (in MMBtu) by multiplying the gallons thereof by the most current GPA 2145 standard factor(s), as updated from time to time for ethane, propane, normal-butane, iso-butane, pentanes and heavier components.

5.5 Producer's Residue Gas attributable to a particular Receipt Point shall be determined by subtracting the calculated Plant Product Shrinkage and Process Fuel (in MMBtu) as calculated in Section 5.2, (6) above from the Gross Heating Value of the Plant Inlet Volume then multiplying such difference times the applicable Residue Gas Percentage of Proceeds as set forth in the applicable ITC. To determine the total Gross Heating Value of the Plant Inlet Volume, the Inlet Volume (in Mcf) attributable to a particular Receipt Point shall be multiplied by the Gross Heating Value (in Btu per cubic foot) for that particular Receipt Point and the result divided by one thousand (1,000) yielding the Gross Heating Value in millions of Btu (MMBtu). Gatherer shall purchase Producer's Residue Gas under the terms specified in the applicable ITC unless Producer has elected to Take-in-Kind one hundred percent (100%) of Producer's Residue Gas attributable to a given ITC, in which case Gatherer shall return to Producer, at the Delivery Point(s), one hundred percent (100%) of Producer's Residue Gas attributable to Producer as determined herein. In the event Producer is not electing to Take-in-Kind its Residue Gas the value due Producer shall equal the quantity of Producer's Residue Gas in MMBtu's times the applicable Residue Gas Price less the Fee(s), as set forth on the applicable ITC.

5.6 Notwithstanding anything herein to the contrary, Gatherer reserves the right to operate the Plant in any mode that Gatherer may elect from time to time, in its sole opinion, including but not limited to full recovery, partial recovery, ethane rejection or total Plant bypass. If Gatherer elects to minimize the recovery of ethane in the Plant, such election shall not affect the determination of Producer's Settlement Gallons attributable to Producer's Gas hereunder. For clarification purposes, Producer's Gas will be deemed to be processed by Gatherer upon delivery by Producer at the Receipt Point(s) in accordance with Producer's Component Recovery Factors as set forth in the applicable ITC regardless of whether Gatherer actually processes Producer's Gas.

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**ARTICLE 14**

**QUANTITY**

6.1 Gatherer agrees to take and Producer agrees to deliver Gas hereunder in accordance with all applicable Laws including, but not limited to, the rules promulgated by any duly constituted state or federal governmental authority, regulatory body or commission having jurisdiction or control over the Parties, its respective facilities or Gas supply, this Agreement, the gathering or processing of Gas hereunder, or any of the provisions hereof (the "<u>Commission</u>") governing the determination of Gas market demand and procedures for the establishment and allocation of allowables and for ratable nominations and takes of Gas from the applicable field(s). The Parties expressly recognize that Gatherer's obligations to take Gas pursuant to the Commission rules or otherwise shall be subject to the ability of Gatherer's Facilities to accommodate all Gas connected thereto, and any other valid reason such as Force Majeure, whether or not of a kind specifically enumerated herein.

6.2 Subject to the terms, conditions and limitations contained herein and in the ITC, Producer agrees to deliver, or cause to be delivered, to the Receipt Point(s), and Gatherer agrees to accept, or cause to be accepted, on an Allocated Service basis those daily quantities of Producer's Gas as set forth in any ITC. The Parties hereby acknowledge and agree that Gatherer must periodically conduct good faith scheduled maintenance and repairs to its Facilities in order to ensure their ongoing effective operations.

6.3 It is recognized that in order for Gatherer to efficiently and safely operate its Gathering System and Plant, it is essential that Gas received into the Gathering System be made available to Gatherer under as uniform operating conditions as possible. Therefore, Producer agrees to use commercially reasonable efforts to deliver Gas, or cause it to be delivered, to Gatherer at a uniform hourly rate of flow. For safety reasons, or to maintain the operational integrity of the Gathering System or Plant, Gatherer may, at any time, with reasonable notice to Producer, interrupt or reduce, in whole or in part, its receipt, gathering of Gas and/or the provision of processing or other services hereunder or delivery of Producer's Gas, all without incurring any liability of any kind to Producer or to others.

6.4 In the event any of the Gatherer's Facilities are of insufficient capacity to take all of the Gas connected thereto, Gatherer shall curtail all Interruptible Service before curtailing any Allocated Service, and within the Allocated Service level, curtailments shall occur pro rata. Gatherer shall remedy any Force Majeure event and any other cause of curtailment or suspension with all reasonable dispatch, and in such manner as to minimize any adverse impact on Producer hereunder.

6.5 In the event Producer elects to Take-in-Kind one hundred percent (100%) of Producer's Residue Gas, attributable to any ITC unless otherwise modified therein, the provisions in **Exhibit** "**C**" hereto shall apply.

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**ARTICLE VII**

**QUALITY**

7.1 All Gas tendered by Producer for gathering at the Receipt Point(s) shall be merchantable Gas and shall conform to all of the most stringent Gas Quality Specifications of any Downstream Transporter(s), excluding the maximum Btu specification; however, in no event shall the Gas quality exceed the specifications set forth below unless specified in the ITC ("<u>Quality</u> <u>Specifications</u>").

(a) At the Contract Pressure Base and Contract Temperature Base, such Gas shall not contain more than:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) One quarter (1/4) grain of hydrogen sulfide per one hundred (100) cubic feet;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Five (5) grains of total sulfur per one hundred (100) cubic feet;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) One quarter (1/4) grain of mercaptans per one hundred (100) cubic feet;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Two percent (2%) by volume of carbon dioxide;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Two percent (2%) by volume of nitrogen, nor four percent (4%) by volume of total inert gases;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Seven (7) pounds of water vapor per one million (1,000,000) standard cubic feet;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) Zero (0) parts per million (ppm) of oxygen; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Not greater than eight (8) GPM (Gallons of NGL per Mcf).

(b) Such Gas shall be commercial in quality and shall be free from any free liquids, foreign material such as solids, sand, dirt, dust, gums, crude oil, iron particles, and other objectionable substances which may be injurious to pipelines or which may interfere with its transportation, measurement or commercial utilization.

(c) At a base pressure of fourteen and sixty-five one-hundredths (14.65) Psia or fourteen and seventy-three one-hundredths (14.73) Psia, as determined by Gatherer, the gross dry heating value of such Gas shall not be less than eleven hundred fifty (1150) Btu's per cubic foot.

(d) The temperature of such Gas shall not be less than forty degrees Fahrenheit (40º F) nor exceed one hundred twenty degrees Fahrenheit (120º F).

(e) Such Gas shall not produce more than 30 BBL per MMscf of Condensate at a temperature of sixty degrees (60°) Fahrenheit at the Cricondentherm Pressure.

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PRODUCER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS GATHERER FROM ANY AND ALL LOSSES, INCLUDING PUNITIVE, EXEMPLARY, TREBLE, INCIDENTAL, CONSEQUENTIAL AND INDIRECT DAMAGES, ARISING FROM OR OUT OF PRODUCER'S GAS NOT MEETING THE QUALITY SPECIFICATIONS PROVIDED OR REFERENCED HEREIN.

7.2 <u>Gas Sampling</u>. Gatherer will obtain a representative sample of Producer's Gas delivered at each Receipt Point employing one of the methods specified in Section 8.8 of this Agreement. Producer shall have the right to witness all sampling of the Gas delivered hereunder, and to inspect any equipment used in determining the nature or quality of the Gas. Gatherer shall notify Producer at least seventy-two (72) hours in advance of any such Gas sampling, so that Producer or its representative may be present. Producer shall have the right to take duplicate samples or conduct simultaneous tests, and if a difference is noted, Producer may request a sample be taken and analyzed by an independent third party with such third party's results being used for this Agreement, such sampling or tests to be at Producer's cost and expense. The sampling frequency shall be determined based upon the average Monthly flow rate at each Receipt Point(s) as follows:

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| | | |
|:---|:---|:---|
| **Minimum Sampling Frequency**<br> (Average Monthly Volumes in Mcf per Day) | **Minimum Sampling Frequency**<br> (Average Monthly Volumes in Mcf per Day) | **Minimum Sampling Frequency**<br> (Average Monthly Volumes in Mcf per Day) |
| **Volume** | **Frequency** | **Type** |
| 0-25 | Annually | Spot |
| 26-250 | Semi-Annually | Spot |
| 251-3,500 | Quarterly | Spot |
| 3,501-5,000 | Monthly | Spot |
| 5,001-25,000 | Monthly | Composite |
| >25,000 | On-Line | Chromatograph |

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7.3 <u>Non-Conformance</u>. Should Gas tendered by Producer fail at any time to conform to the Quality Specifications set forth in this Article VII, except as otherwise permitted in an applicable ITC, Gatherer may in its discretion refuse to accept or curtail such non-conforming Gas ("<u>Non-Specification Gas</u>"). Producer shall have the right to conform the Non-Specification Gas to meet the Quality Specifications. If Producer does not elect to or cannot conform the Gas to Quality Specifications, then Gatherer may accept Non-Specification Gas tendered by Producer hereunder and condition and/or treat and/or dehydrate such Non-Specification Gas to conform to the Quality Specifications, and charge Producer the Fee(s) as specified in **Exhibit** "**D**"**,** Treating Fee(s) and Fuel(s), hereto for such services. The continued acceptance of any Non-Specification Gas by Gatherer hereunder shall not constitute a waiver by Gatherer of any Quality Specifications for any future deliveries, but shall constitute recognition by Producer of Gatherer's ongoing right at any time without further notification to (a) reject all of such Gas; or (b) accept all of such Gas; or (c) accept any quantity of such Gas and reject the remaining Non-Specification Gas, and shall satisfy all of Gatherer's obligations to take and receive hereunder.

7.4 Producer shall not introduce corrosion inhibitors, chemicals, antifreeze agents or other materials containing constituents harmful or injurious to Gatherer's operations, or that result in Gatherer's inability to meet downstream Residue or Plant Products specifications that are not recovered in the Plant during normal operations, into Gas delivered hereunder. Gas delivered hereunder shall not contain any substance that is a non-exempt hazardous or toxic waste or contaminant under applicable Laws.

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**ARTICLE VIII**

**MEASUREMENT**

8.1 For the purposes of this Agreement, the Party metering the Gas, or whose designee meters the Gas, at a particular Receipt Point(s) or Delivery Point(s) is referred to as "Gatherer" and the other Party is referred to as "Producer."

The measuring Facilities shall be designed, installed, operated, and maintained by Gatherer or its designee in accordance with the following standards:

(a) Orifice Measurement - American Gas Association Report Number 3, dated 2000 or the most recent edition as agreed to by all Parties (herein referred to as AGA 3).

(b) Turbine Measurement - American Gas Association Report Number 7, dated 1996 or the most recent edition as agreed to by all Parties (herein referred to as AGA 7).

(c) Positive Measurement - American National Standards Institute B109.2, dated 2000 or the most recent edition as agreed to by all Parties (herein referred to as ANSI B109.2).

(d) Ultrasonic Measurement - American Gas Association Report Number 9, dated 2003 or the most recent edition as agreed to by all Parties (herein referred to as AGA 9).

8.2 The measuring Facilities to measure the volumes of Gas delivered at each of the Receipt Point(s) shall be maintained and operated by Gatherer or its designee. However, Producer may, at its option and expense, install and operate meters, instruments and equipment, in a manner that will not interfere with Gatherer's equipment, to check Gatherer's meters, instruments, and equipment, but the measurement for the custody transfer of Gas for the purpose of this Agreement will be by Gatherer's meter only, except as hereinafter specifically provided. The meters, check meters, instruments, and equipment installed by each Party will be subject at all reasonable times to inspection or examination by the other Party, but the calibration and adjustment thereof will be done only by the installing Party. If the Gatherer institutes a new method or technique of Gas measurement, approved by regulatory authority, such as electronic gas measurement (EGM), Gatherer may substitute such new method or technique with written permission from Producer, which such permission should not be reasonably withheld.

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8.3 All meters will be calibrated and/or proven on a mutually agreed schedule, ensuring that the meter calibration or proving frequency is in compliance with regulatory requirements. Notification of scheduled calibrations shall be made to all interested Parties and reasonable effort will be made to accommodate each Party's schedule; however, calibration will proceed at the scheduled time regardless of attendees. Records from Gatherer's measuring equipment are the property of Gatherer who will keep all such records on file for a period of not less than two (2) years. Upon request, Gatherer will make available to Producer volume records from the measuring equipment, together with calculations therefrom, for inspection and verification, subject to return within thirty (30) Days after receipt thereof by Producer. All Receipt Point(s) will be calibrated and/or proven utilizing the following criteria:

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| | |
|:---|:---|
| **Meter Test and Inspection Frequency**<br> (Average Monthly Volumes in Mcf per Day) | **Meter Test and Inspection Frequency**<br> (Average Monthly Volumes in Mcf per Day) |
| **Volume** | **Frequency** |
| 0-25 | Annually |
| 26-250 | Semi-Annually |
| 251-3,500 | Quarterly |
| >3,500 | Monthly |

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8.4 Either Party shall have the right to conduct such pulsation tests as they deem prudent, at the testing Party's sole risk and expense. If excessive pulsation is evident, mutually agreed modifications to operation or facility design will be made to reduce the effect of such pulsation.

8.5 If the percentage of inaccuracy from the results of any test is greater than one percent (1%), the registration of such meter shall be corrected at the rate of such inaccuracy for any period which is definitely known or agreed upon. In the event the period is not definitely known or agreed upon, such correction shall be for a period extending back one-half (1/2) of the time elapsed since the date of the last calibration. Following any test, measurement equipment found inaccurate shall be immediately restored by Gatherer as closely as possible to a condition of accuracy. If any measurement equipment, including testing equipment, is out of service or registering inaccurately in any percentage for any reason so that the amount of Gas delivered cannot be estimated or computed from the reading thereof, the amount of Gas delivered through such meter during the period such meter is out of service or registering inaccurately shall be estimated and agreed upon by Gatherer and Producer upon the basis of the best data available using the first of the following methods which is feasible:

(a) by using the registration of any check meters if installed and accurately registering;

(b) by correcting the error if the percentage of error is ascertainable by calibration, test or mathematical calculation; or

(c) by estimating the quantity of deliveries by comparison with deliveries during preceding periods under similar conditions when the meter was known to be registering accurately.

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8.6 <u>Measurement Volume Computations</u>

(a) The unit of volume of Gas shall be one (1) standard cubic foot at the Contract Pressure Base and Contract Temperature Base and assumed to be Dry at Base unless otherwise specified in the applicable ITC. The energy content may be recalculated, if the water vapor of the Gas is determined to be greater than seven (7) pounds of water vapor per one million (1,000,000) standard cubic feet, by adjusting the measured volume to correct for the volume of water vapor assuming saturation at the temperature and pressure of measurement and multiplying the corrected volume by the gross dry heating value.

(b) Atmospheric pressure shall be assumed to be the pressure value as reasonably determined by Gatherer for each Receipt Point(s) and Delivery Point(s) location pursuant to generally accepted practices.

(c) All metered volumes shall be computed in accordance with the standards set forth in Section 8.1 above.

8.7 Records of calibration and/or proving and data associated with the volume calculation are the property of Gatherer who will keep all such records and data on file for a period of not less than two (2) Years. Upon request, Gatherer will make available to Producer records of calibration and/or testing and data associated with the volume calculation, subject to return within thirty (30) Days after receipt thereof by Producer.

8.8 Gatherer shall sample and determine the Gross Heating Value, relative density and compressibility at the Receipt Point(s) or Delivery Point(s) utilizing the following standards:

(a) Gas Processors Association (GPA) 2166 – Obtaining Natural Gas Samples for Analysis by Gas.

(b) Gas Processors Association (GPA) 2261 – Analysis for Natural Gas and Similar Gaseous Mixtures by Gas Chromatography.

(c) Gas Processors Association (GPA) 2145 – Physical Constants for Paraffin Hydrocarbons and Other Components of Natural Gas.

(d) Gas Processors Association (GPA) 2172 – Calculation of Gross Heating Value, Relative Density, and Compressibility of Natural Gas Mixtures from Compositional Analysis.

(e) American Gas Association Report Number 8 – Compressibility Factors of Natural Gas and Other Related Hydrocarbon Gases.

8.9 Gatherer shall sample the flowing Gas stream utilizing one of the following methods:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) On-line Chromatography.

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(b) Accumulated Sample – If this method is utilized the application of Gas quality in the volume calculation will be during the time period the Gas sample was accumulated.

(c) Spot Sample – If this method is utilized the application of Gas quality in the volume calculation will be the time period beginning on the date the sample was obtained until the next sample is obtained.

**ARTICLE IX**

**BILLING**

9.1 <u>Gatherer</u><u>'</u><u>s Statement</u>. Gatherer shall render a statement per Receipt Point to Producer on or about the twenty-fifth (25<sup>th</sup>) Day of each Month setting forth (a) the amount due Gatherer for all Fee(s) incurred by Producer for the services performed hereunder by Gatherer during the preceding Month, (b) the dollar amount due Producer for the settlement quantity of Residue Gas purchased from Producer for that statement period (the "<u>Residue Gas Value</u>"), and (c) the dollar amount due Producer for the settlement quantity of the Producer's Settlement Gallons purchased from Producer for that statement period (the "<u>Plant Product Value</u>"). Such statement shall contain reasonably detailed information showing the determination of such Residue Gas Value and such Plant Product Value and any applicable Fee(s). The Parties agree that the Fee(s) owed by Producer to Gatherer hereunder for such Month may be deducted from the Residue Gas Value and/or Plant Product Value owed to Producer for such Month. Gatherer shall (x) include with such statement an invoice for the difference between the total dollar amount of the Fee(s), and the sum of the Residue Gas Value and Plant Product Value owed to Producer, if such Fee(s) are greater than the sum of the Residue Gas Value and Plant Product Value; or (y) if the sum of if the Residue Gas Value and Plant Product Value owed to Producer are greater than such Fee(s), Gatherer shall pay Producer the difference by wire transfer on or before the last Business Day of the Month following the delivery Month. If actual quantities for Producer's Residue Gas or Producer's Settlement Gallons are not available, Gatherer may utilize a reasonable, good faith, estimated quantity based upon quantities received, gathered or extracted by Gatherer during the preceding Month. As soon as the actual quantity becomes available, the estimate shall be adjusted and the adjustment shall be reflected in the subsequent Month's statement. In the event such quantities are estimated for any period, corrected statements shall be rendered by Gatherer to Producer and paid by Producer or refunded or credited by Gatherer, as the case may be, in each instance in which the actual quantity received or delivered hereunder with respect to a Month shall be determined to be at variance with the estimated quantity theretofore made the basis of billing and payment hereunder.

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9.2 <u>Payment</u>. If the Fee(s) owed by Producer to Gatherer for the Month on any statement are greater than the sum of the Residue Gas Value and Plant Product Value owed to Producer for the statement period, then Producer shall pay Gatherer the amount due in the form of immediately available federal funds by wire or electronic fund transfer to the bank account specified on the statement, or any other mutually agreed upon method, on or before the tenth (10<sup>th</sup>) Day following the rendition of the statement described in Section 9.1 hereof. Payments by either Party due on a Saturday or a bank holiday shall be made on the preceding Business Day unless such holiday is Monday, in which case payment shall be made on the following Business Day; payments due on Sunday shall be made on the next Business Day. The paying Party must tender a timely payment even if the statement includes an estimated receipt or delivery volume. Any payment shall not prejudice the right of the paying Party to an adjustment of any statement to which it has taken written exception, provided that such Party's exception shall have been made within the time period set forth in Section 19.15 herein. Gatherer may at any time collect any amounts due from Producer or its Affiliates by netting against, setting off against, and deducting from any amounts due and payable by Gatherer to Producer and its Affiliates under this Agreement or any other agreement between Producer and its Affiliates, on the one hand, and Gatherer, on the other. If the paying Party fails to pay any statement in whole or in part when due, in addition to any other rights or remedies available to the Party to whom payment is due, interest at the Stated Rate shall accrue on all unpaid amounts. Notwithstanding the foregoing, if a legitimate good faith dispute arises between Producer and Gatherer concerning a statement, the paying Party shall pay that portion of the statement not in dispute on or before such due date, and upon the ultimate determination of the disputed portion of the statement, the paying Party shall pay the remaining amount owed, if any, plus the interest accrued thereon at the Stated Rate from the due date. Any amounts refunded to a paying Party following resolution of any billing dispute shall accrue interest at the Stated Rate from the date of initial payment to the date of refund.

**ARTICLE X**

**WARRANTY**

10.1 <u>Producer</u><u>'</u><u>s Warranty</u>. Producer hereby represents and warrants that it has good and marketable title to, and full legal right and authority to deliver to Gatherer for gathering and processing hereunder, all Gas tendered by Producer at the Receipt Point(s). Producer represents and warrants that such Gas shall, at the Receipt Point(s), be free and clear of any and all claims, royalties, liens, encumbrances, and applicable Taxes that are imposed upon production of such Gas and all other components of such Gas and/or upon removal of liquid hydrocarbons, and **PRODUCER AGREES TO RELEASE, PROTECT, DEFEND, INDEMNIFY AND HOLD HARMLESS** Gatherer from and against all Losses incurred by Gatherer on account of any such liens, encumbrances and claims.

10.2 <u>Gatherer</u><u>'</u><u>s Warranty</u>. Gatherer hereby represents and warrants that it has the full legal right and authority to gather and process for Producer, all Gas tendered by Producer at the Receipt Point(s) pursuant to this Agreement. Gatherer represents and warrants that such Gas from the time of receipt at the Receipt Point(s) to the time of delivery at the Delivery Point(s) shall be free and clear of all liens, encumbrances and claims whatsoever, and **GATHERER AGREES TO RELEASE, PROTECT, DEFEND, INDEMNIFY AND HOLD HARMLESS** Producer from and against all Losses incurred by Producer on account of any such liens, encumbrances and claims.

**ARTICLE XI**

**POSSESSION AND TITLE OF GAS**

11.1 <u>Party in Possession</u>. As between the Parties hereto, Producer shall control and possess the Gas affected by this Agreement at all times prior to and until delivery to Gatherer at the Receipt Point(s) and, if Producer is exercising its Take-in-Kind rights, after redelivery by Gatherer to Producer at the Delivery Point(s). Gatherer shall control and possess the Gas affected by this Agreement at all times after delivery thereof by Producer to Gatherer at the Receipt Point(s) and, if Producer is exercising its Take-in-Kind rights, until redelivery by Gatherer to Producer at the Delivery Point(s).

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11.2 <u>Responsibility and Liability</u>. Except as otherwise set forth herein, the Party in control and possession of the Gas affected by this Agreement shall be responsible and pay for any and all Losses caused thereby and occurring while the Gas is in the possession and control of such Party.

11.3 <u>Title</u>. Except for title to FL&U and Process Fuel which vests in Gatherer in accordance with Section 3.2 above and Condensate which vests as provided below, title to all of Producer's Gas, including Producer's Residue Gas and Producer's Settlement Gallons, when sold by Producer to Gatherer, shall vest in Gatherer at the Plant(s) tailgate. During periods when Producer is exercising its Take-in-Kind rights, title to Producer's Residue Gas shall remain with Producer. Title to Condensate shall be vested in Gatherer at the point(s) at which it is collected or extracted from Gatherer's Gathering System.

**ARTICLE XII**

**TAXES AND ROYALTIES**

12.1 <u>Producer Taxes and Royalties</u>. Producer shall be responsible for all applicable Taxes, New Taxes and royalties of whatever kind on or with respect to the production, delivery and gathering or processing of Gas hereunder. Producer shall indemnify, reimburse, defend and hold harmless Gatherer from and against any and all claims or Losses attributable to such Taxes, New Taxes and royalties.

**ARTICLE XIII**

**REMEDIES/LIABILITY**

13.1 <u>Remedies</u>. To the extent not limited or waived herein, with particularity in this Article XIII, each Party reserves to itself all rights, set-offs, counterclaims and other remedies and defenses to which such Party may be entitled arising from this Agreement. All payment obligations hereunder may be offset against each other or recouped.

13.2 <u>LIMITATION OF LIABILITY</u>**.** EXCEPT AS PROVIDED IN SECTION 7.1 HEREOF, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR EXEMPLARY OR PUNITIVE DAMAGES OR ANY SPECIAL, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OF ANY CHARACTER, INCLUDING WITHOUT LIMITATION, LOSS OF USE, LOST PROFITS OR REVENUES, COST OF CAPITAL, CANCELLATION OF PERMITS, UNABSORBED TRANSPORTATION OR STORAGE CHARGES, TERMINATION OF CONTRACTS, TORT OR CONTRACT CLAIMS (OTHER THAN CONTRACT CLAIMS ARISING OUT OF AN AGREEMENT BETWEEN GATHERER AND PRODUCER), OR LOST PRODUCTION, IRRESPECTIVE OF WHETHER CLAIMS FOR SUCH DAMAGES ARE BASED UPON CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE. TO THE EXTENT NOT LIMITED OR WAIVED HEREIN, EACH PARTY RESERVES TO ITSELF ALL RIGHTS, SET-OFFS, COUNTERCLAIMS AND OTHER REMEDIES AND DEFENSES TO WHICH SUCH PARTY MAY BE ENTITLED ARISING FROM THIS AGREEMENT. NOTHING IN THIS SECTION 13.2 SHALL AFFECT THE EQUITABLE REMEDIES FOR THE ENFORCEMENT OF PROPERTY RIGHTS CONVEYED OR ESTABLISHED UNDER ANY PART OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION THE REMEDIES SET FORTH IN ARTICLE IV. FOR CERTAINTY, THE REMEDIES SET FORTH IN ARTICLE IV SHALL CONTROL IN THE EVENT OF A BREACH OF THE DEDICATION OBLIGATIONS.

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**ARTICLE XIV**

**CREDIT ASSURANCE**

14.1 In the event Gatherer determines Producer's credit to be unsatisfactory in Gatherer's sole and reasonable opinion at any time during the term of this Agreement, Gatherer may demand "<u>Adequate Assurance of Performance</u>," which shall mean sufficient security in a form, an amount and for a term reasonably specified by Gatherer. Producer at its option may then provide one of the following forms of security:

(a) Post an irrevocable standby letter of credit in a form and from a bank satisfactory to Gatherer; or,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Provide a prepayment or a deposit.

14.2 If the credit of Producer's guarantor is deemed to be satisfactory in Gatherer's sole opinion, the demand for Adequate Assurance of Performance can be satisfied with a guaranty issues on behalf of Producer in a form, amount and tenor acceptable to Gatherer, but only for as long as the credit of Producer's guarantor continues to be acceptable to Gatherer. For the avoidance of doubt, if the Producer's guarantor or guaranty is no longer acceptable to Gatherer, Producer shall be required to provide Adequate Assurance of Performance in the form of Section

14.1 (a) or (b) above.

14.3 Should Producer or its guarantor fail to provide Adequate Assurance of Performance within two (2) Business Days after receipt of written demand for such assurance, then Gatherer shall have the right to suspend performance under this Agreement until such time as Producer furnishes Adequate Assurance of Performance. If such assurance is not provided by Producer within ten (10) Days from written demand, Gatherer may terminate this Agreement in addition to having any and all other remedies available hereunder, at law or in equity.

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**ARTICLE XV**

**NOTICES**

15.1 <u>Notices</u>. Any notice, request, demand, or statement provided for in this Agreement, or any notice which a Party may desire to give to the other, shall be in writing, and shall be delivered by letter, facsimile, email or other documentary form. Notice by facsimile, email or hand delivery shall be deemed to have been received by the close of the Business Day on which it is transmitted or hand delivered (unless transmitted or hand delivered after close, in which case it shall be deemed received at the close of the next Business Day) or such earlier time confirmed by the receiving Party:

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| | |
|:---|:---|
| **Gatherer:** | **<u>For Notices and Correspondence</u>:** |
|  | **ETC Texas Pipeline, Ltd.** |
|  | 8111 Westchester Drive, Suite 600<br> Dallas, Texas 75225<br> Attention: Contract Administration |
|  | Phone: 214-981-0700 |
|  | Fax: 214-750-1749 |
|  | **<u>For Remittance by ACH or Wire Transfer</u>:** |
|  | **ETC Texas Pipeline, Ltd.** |
|  | Wells Fargo Bank, N.A. |
|  | Account Number: 207990-0565328 |
|  | Wire ABA Number: 121000248<br> ACH ABA Number: 053101561 |
|  | **<u>For Accounting Matters</u>:** |
|  | **ETC Texas Pipeline, Ltd.** |
|  | Attention: Gas Plant Accounting<br> 8111 Westchester Drive, Suite 600<br> Dallas, Texas 75225<br>**<u>For Scheduling</u>:**<br> Email: <u>dlMidconPanhandleETXScheduling@energytransfer.com</u><br>|
| **Producer:** | **<u>For Notices and Scheduling</u>:** |
|  | **Alpha Energy, Inc.**<br> 14143 Denver West Parkway, Suite 100<br> Golden, Colorado 80401<br> ![sig02.jpg](sig02.jpg) |
|  | **<u>For Remittance by ACH Transfer</u>:** <br> **Alpha Energy Texas Operating, LLC** |
|  | JPMorgan Chase Bank, N.A.<br> Account Number: 839022321<br> ACH ABA Number: 111000614 |

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| |
|:---|
| **<u>For Invoices and Statements</u>:** |
| **Alpha Energy, Inc.** |
| 14143 Denver West Parkway, Suite 100 |
| Golden, Colorado 80401 |
| ![sig03.jpg](sig03.jpg) |
| ![sig04.jpg](sig04.jpg) |

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Such addresses and/or other contact information may from time to time be changed by sending appropriate notice thereof to the other Party in any manner provided in this Section 15.1.

**ARTICLE XVI**

**FORCE MAJEURE**

16.1 <u>Suspension of Obligations</u>. Notwithstanding anything herein to the contrary, the obligation to make payments then due hereunder will not be suspended by an event of Force Majeure*.* If either party is rendered unable, wholly or in part, by any of the events or occurrences listed below (each of which shall constitute an event of Force Majeure), individually or in the aggregate, to perform or comply with any obligation or condition of this Agreement, such obligation or condition will be suspended during the continuance of the inability so caused and such party will be relieved of liability for damages stemming from any failure to perform the same during such period:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Any cause not reasonably within the control of the affected party;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any act or omission by parties not controlled by the party having the difficulty;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Acts of God or the public enemy, civil unrest or criminal activity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The elements (including but not limited to rain, hurricanes, floods, earthquakes, tornados, and freezing of wells or lines of pipe), or threats thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Fire, accidents, or breakdowns;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Strikes and any other industrial, civil, or public disturbance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Failure of upstream or downstream pipelines to install facilities or to take or transport gas;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Accidents, repairs, maintenance or alteration to lines of pipe or equipment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Inability to obtain rights-of-way, easements or property rights for the construction or operation of any necessary facilities hereunder on a commercially reasonable basis;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) Inability to obtain materials, supplies, permits or labor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) Temporary failure of gas supply;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) Failure of downstream transporters to adhere to contractual commitments to either party; or

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(m) Any Applicable Law or restraints of any government or governmental body or authority, civil or military.

16.2 <u>Notice</u>. A Party which is unable, in whole or in part, to carry out its obligations under this Agreement due to Force Majeure shall give prompt written notice to that effect to the other Parties stating with reasonable particularity the circumstances underlying such Force Majeure and the obligations such Party is unable to carry out.

16.3 <u>Resolution</u>. A Party claiming Force Majeure shall use commercially reasonable efforts to remove the cause, condition, event or circumstance of such Force Majeure, shall give prompt notice to the other Parties of the termination of such Force Majeure, and shall resume performance of any suspended obligation promptly after termination of such Force Majeure. The decision to settle a strike or labor disturbance is at the sole discretion of the Party claiming Force Majeure due to such strike or labor disturbance. Nothing herein shall obligate either party to settle strikes or lockouts under terms that are unacceptable to the affected party.

16.4 <u>Allocated Plant Products</u>. When an event of Force Majeure prevents normal gathering and processing operations for Producer's Gas, notwithstanding anything herein to the contrary, Gatherer may, in its sole discretion, allocate Plant Products actually recovered, saved and sold by Gatherer to each Receipt Point based on the ratio that the actual gallons of each hydrocarbon component recovered at the Plant bears to the total Theoretical Gallons of each hydrocarbon component available from all Gas delivered to the Plant from all Receipt Points (including Producer's Receipt Points) on Gatherer's system.

16.5 <u>Suspension of Processing</u>. If and to the extent Gatherer curtails or suspends the processing of Producer's Gas at the Plant due to Force Majeure, Gatherer shall condition such Gas to the extent feasible and bypass the Plant. In the event any of Producer's Gas in conditioned and bypasses the Plant, with respect to such Gas no Component Plant Products or Plant Product Shrinkage will be allocated to the affected Receipt Point(s).

**ARTICLE XVII**

**TERM AND TERMINATION**

17.1 <u>Effective Date and Term</u>. This Agreement shall govern any and all Transactions and shall remain in effect from Month to Month until terminated by either Party as of the end of a Month on sixty (60) Days' written notice; provided, that if one or more ITC's are then in effect, termination of this Agreement shall not be effective until the expiration of the latest term under the last effective ITC. Unless stated otherwise, each ITC shall automatically extend from Month to Month after its Primary Term end date until terminated by either Party as of the end of the Primary Term or Monthly thereafter by giving the other Party at least sixty (60) Days' advanced written notice of the ITC termination. All indemnity obligations, confidentiality obligations, payment obligations and audit rights shall survive the termination or expiration hereof.

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17.2 <u>Termination</u>. This Agreement may be terminated or canceled as follows:

(a) By either Gatherer or Producer upon the occurrence of any Default or Event of Default if the terminating Party is not itself in Default (other than a Default which occurs because such Party is rightfully withholding performance in response to the other Party's Default);

(b) By the applicable Party pursuant to any provision of this Agreement expressly providing termination rights; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) By all of the Parties at any time upon mutual written agreement.

17.3 <u>Rights and Obligations Upon Termination</u>. Termination or cancellation of this Agreement shall not relieve the Parties from any obligation accruing or accrued prior to the date of such termination. Upon termination of this Agreement, the Parties shall retain all other rights and remedies available at law or in equity.

**ARTICLE XVIII**

**REPRESENTATIONS AND WARRANTIES**

18.1 <u>Representations and Warranties</u>. Each of Producer and Gatherer represents and warrants to each other that on and as of the date hereof:

(a) It is duly formed, validly existing and in good standing under the laws of its state of jurisdiction or formation, with power and authority to carry on the business in which it is engaged and to perform its respective obligations under this Agreement;

(b) The execution and delivery of this Agreement by it have been duly authorized and approved by all requisite corporate, limited liability company, partnership or similar action;

(c) It has all the requisite corporate, limited liability company, partnership or similar power and authority to enter into this Agreement and perform its obligations hereunder;

(d) The execution and delivery of this Agreement does not, and consummation of the Transactions contemplated herein will not, violate any of the provisions of organizational documents, any agreements pursuant to which it or its property is bound or, to its knowledge, any applicable Laws;

(e) This Agreement is valid, binding and enforceable against it in accordance with its terms subject to bankruptcy, moratorium, insolvency and other Laws generally affecting creditors' rights and general principles of equity (whether applied in a proceeding in a court of law or equity); and

(f) It is qualified to do business in the State(s) in which the Dedicated Interests, Receipt Point(s) and Delivery Point(s) are located.

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**ARTICLE XIX**

**MISCELLANEOUS**

19.1 <u>Entire Agreement</u>. This Agreement and each applicable ITC constitutes the entire agreement between and among the Parties pertaining to the subject matter hereof and supersedes all prior and contemporaneous (oral or written) negotiations, proposals, agreements and understandings.

19.2 <u>Modifications</u>. No modifications of the terms and provisions of this Agreement shall be or become effective except by the execution by each of the Parties of a supplementary written agreement.

19.3 <u>Waiver</u>. No waiver by any Party of any one or more Defaults by the other Party in performance of any provisions of this Agreement shall operate or be construed as a waiver of any future Default or Defaults, whether of a like or a different character.

19.4 <u>No Third-Party Beneficiaries</u>. This Agreement is for the sole and exclusive benefit of the Parties hereto. Except as expressly provided herein to the contrary, nothing herein is intended to benefit any other Person not a Party hereto, and no such Person shall have any legal or equitable right, remedy or claim under this Agreement.

19.5 <u>Assignment</u>. Except as otherwise set forth herein, or in the applicable ITC, this Agreement is binding upon the successors or assigns of Gatherer and Producer. Producer shall not voluntarily or involuntarily, directly or indirectly, transfer or otherwise alienate any or all of its rights, title or interests under this Agreement to any other Person without the express prior written consent of Gatherer, which consent shall not be unreasonably delayed or withheld, it being understood and agreed that any such transferee must be deemed creditworthy by Gatherer and Gatherer may impose reasonable security requirements as a condition to granting such consent; provided, however, that either Party may (without seeking the consent of the other Parties) transfer or otherwise alienate any of its rights, title or interests under this Agreement in connection with (i) a transfer to an Affiliate which remains an Affiliate and is deemed creditworthy by Gatherer or will provide Adequate Assurance of Performance to Gatherer pursuant to Article XIV if not, and (ii) the granting of a pledge, mortgage, hypothecation, lien or other security interest and any transfer pursuant to or in settlement of any terms or provisions of any agreement creating any such security interest. Unless otherwise agreed to in writing by the other Party, and except for transfers pursuant to (ii) above, both the transferor and the transferee shall be jointly and severally responsible and primarily liable for the full and timely performance of all covenants, agreements and other obligations, and the timely payment and discharge of all liabilities, costs and other expenses arising (directly or indirectly) pursuant to this Agreement.

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Intermediary transferees shall not be relieved of any obligations as a result of a subsequent transfer to another Person. Promptly upon transfer of all or any portion of its rights, title and interests in and to this Agreement, the transferor shall provide the other Party with a copy of such instrument. No transfer or succession to the interest of Producer hereunder, wholly or partially, shall affect or bind Gatherer until the first Day of the Month following the date Gatherer has received a copy of the recorded transfer document or other proof satisfactory to Gatherer that the claimant is legally entitled to such interest. Any attempted transfer in violation of the terms of this Agreement of any rights, title and interests arising under this Agreement shall constitute a Default and be null and void and have no force or effect. Without limiting the foregoing, the Parties hereby acknowledge and agree that the terms and conditions of this Agreement, including their respective commitments under Section 4.1, are intended to be and shall constitute covenants running with Producer's right, title and interest in and to the Dedicated Interests, as a burden binding on Producer, its successors and assigns, and as a benefit inuring to Gatherer, its successors and assigns. Prior to assigning any interest in the Dedicated Interests, Producer shall notify the potential acquiring party of the existence and terms of the Dedication and shall cause (a) any permitted conveyance of all or any of the Dedicated Interests to be made expressly subject to this Agreement, and (b) all transferees to execute a written instrument acknowledging such Dedication, and such permitted transferees' obligations under this Agreement.

19.6 <u>Confidentiality</u>. The Parties agree that all information and data exchanged by them pursuant to or in connection with this Agreement shall be maintained in strict and absolute confidence for the term of this Agreement and one (1) Year following its termination or cancellation except for disclosure (a) pursuant to the permitted sale, disposition or other transfer (directly or indirectly) of a Party's rights and interests in and to this Agreement, (b) to lenders, accountants and other representatives of the disclosing Party with a need to know such information, (c) in conjunction with a merger, consolidation, share exchange or other form of statutory reorganization involving a Party, (d) as required to make disclosure in compliance with any applicable Law or (e) to a Party's officers, directors and personnel, as necessary to carry out such Party's obligations under the Agreement.

19.7 <u>Exhibits and Schedules</u>. All exhibits, schedules and the like contained herein or attached hereto are integrally related to this Agreement and are hereby made a part of this Agreement for all purposes. Except as otherwise provided in Section 2.1 hereof, with respect to any ITC, to the extent of any ambiguity, inconsistency or conflict between the body of this Agreement and any of the exhibits, schedules and the like attached hereto, the terms of the body of this Agreement shall prevail.

19.8 <u>Choice of Law; Venue</u>. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED, ENFORCED AND PERFORMED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. The exclusive venue for any suit, action or proceeding brought by either Party in connection with this agreement or arising out of the terms or conditions hereof shall be in the state or federal courts located in Dallas County, Texas. The Parties irrevocably and unconditionally waive, to the fullest extent they may legally and effectively do so, any objection they may now or hereafter have to the laying of venue of any suit, action, or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in the state and federal courts situated in Dallas County, Texas.

19.9 <u>Further Assurances</u>. Subject to the terms and conditions set forth in this Agreement, each of the Parties agrees to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or to cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the Transactions contemplated by this Agreement.

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In case, at any time after the execution of this Agreement, any further action is necessary or desirable to carry out its purpose, the proper officers or directors of the Parties shall take or cause to be taken all such necessary actions.

19.10 <u>Survival</u>. The representations, warranties, and indemnities given by the Parties shall survive this Agreement without regard to any action taken pursuant to this Agreement, including, without limitation, the execution of any documents affecting an interest in real property or any investigation made by the Party asserting the breach hereof.

19.11 <u>Severability</u>. Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction shall be ineffective as to such jurisdiction, to the extent of such invalidity or unenforceability, without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any terms and provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, each provision shall be interpreted to be only as broad as is enforceable.

19.12 <u>Terminology</u>. Articles, sections and other titles or headings are for convenience only, shall neither limit nor amplify the provisions of the Agreement itself, and all references herein to articles, sections or subdivisions thereof shall refer to the corresponding article, section or subdivision thereof of this Agreement unless specific reference is made to such articles, sections or subdivisions of another document or instrument.

19.13 <u>Counterparts</u>. This Agreement may be executed in multiple counterparts, each of which, when so executed, shall be deemed an original, and all of which together shall constitute but one and the same instrument.

19.14 <u>Compliance with Laws</u>. This Agreement and the performance of the obligations contemplated herein are and shall be subject to all valid applicable Laws. The Parties shall act in accordance with each such Law. The Parties will cooperate with respect to compliance with all governmental authorizations, including obtaining and maintaining all necessary regulatory authorizations or any reasonable exchange or provision of information needed for filing or reporting requirements.

19.15 <u>Audit</u>. Each Party shall have the right to examine and audit, at its own expense, at reasonable times during regular business hours and upon reasonable notice, all books, records and charts of the other Party to the extent necessary to verify the accuracy of any measurement and payment hereunder, and the related statements, computations, allocations and procedures provided for in the Agreement, for a period of two (2) Years after the date of the statement in which such measurement, payment, computation, allocation or procedure is reflected; provided, however, that a formal audit of accounts shall not be made more often than every twelve (12) Months and will not include any time period for which a prior audit hereunder was conducted. Any inaccuracy will be promptly corrected when discovered, but in no event later than six (6) Months after such audit exceptions are received by the audited Party; provided, however, that no Party shall have the right to contest any such measurement or payment, or the related statement, computation, allocation or procedure, if the matter is not called to the attention of the other Party in writing within two (2) Years after (a) the date upon which such measurement was conducted or such payment was made, or (b) the date of the related statement, computation, allocation or procedure containing the questioned inaccuracy. Any of such items not contested with specificity in writing within such time period shall conclusively be deemed to be accurate.

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19.16 <u>Right of Way</u>. To the maximum extent under the Subject Lease(s) and to the maximum extent Producer or its lease operator may have any rights however derived (whether from an oil and gas lease, easement, governmental agency order, regulation, statute, or otherwise), Producer hereby ASSIGNS, TRANSFERS, GRANTS and CONVEYS and shall cause each Affiliate owning any Dedicated Interests to ASSIGN, TRANSFER, GRANT and CONVEY, without warranty of title, either express or implied, to Gatherer and Gatherer's gas gathering contractor, if any, and their respective successors and assigns, out of Producer's right, title and interest in and to the real property constituting the Dedicated Interests (whether a fee simple absolute, fee simple determinable, easement, equitable servitude, leasehold and/or other estate or interest in real property) and for the duration of the term of this Agreement, easements and right of way upon such portions of the lands covered by the Dedicated Interests or, where applicable, other right to lay and maintain pipelines, meters, and any equipment on such real property, in each case as reasonably necessary in connection with the Gathering System or the fulfillment of Gatherer's rights and obligations hereunder, including without limitation the purchase or handling of Producer's Gas (the "<u>I&E Easement</u>"); provided that the I&E Easement shall be subject to Producer's or its Affiliates' use of any of the property for its operations or the valid prior rights of third parties and the requirements of the applicable lease (including financial requirements) or other vesting instrument, if any, from which Producer's applicable right, title or interest arises. All pipelines, meters, and other equipment placed by Gatherer or Gatherer's contractors on the lands and leases will remain the property of Gatherer, and Gatherer may remove them at any time consistent with its obligations under this Agreement.

*[Signature Page Follows This Page]*

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**IN WITNESS WHEREOF**, the Parties hereto have caused this Agreement to be signed by their respective duly authorized representatives effective as of the Effective Date.

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| | | | |
|:---|:---|:---|:---|
| **GATHERER** | **GATHERER** | **PRODUCER** | **PRODUCER** |
| **ETC TEXAS PIPELINE, LTD.** | **ETC TEXAS PIPELINE, LTD.** | **ALPHA ENERGY, INC.** | **ALPHA ENERGY, INC.** |
| **By: LG PL, LLC, its general partner** | **By: LG PL, LLC, its general partner** |  |  |
| By: |  | By: | ![sig05.jpg](sig05.jpg) |
| Name: | Russell Stevens | Name: | Jay S. Leaver |
| Title: | Vice President, Commercial Operations | Title: | President |
| Date: |  | Date: | 8/17/2022 |

---

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**EXHIBIT** "**A**"

**EXAMPLE OF INDIVIDUAL TRANSACTION CONFIRMATION**

**TO THAT CERTAIN**

**GATHERING AND PROCESSING AGREEMENT** 

**BETWEEN**

**ALPHA ENERGY, INC.** 

**AND**

**ETC TEXAS PIPELINE, LTD.** 

**DATED**

**AUGUST 1, 2022**

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| | |
|:---|:---|
| **<u>BASE AGREEMENT</u>:** | Gathering and Processing Agreement dated<u> </u> |
|  | Contract Number<u> </u> |

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**<u>INDIVIDUAL TRANSACTION NUMBER</u>:**

**<u>PRODUCER</u>:**

**<u>GATHERER</u>: ETC TEXAS PIPELINE, LTD.**

This Individual Transaction Confirmation constitutes part of and is subject to all of the terms and provisions of the Base Agreement (collectively, the "<u>Agreement</u>"). All capitalized terms not defined herein shall have the meaning ascribed to such terms in the Base Agreement.

**<u>GATHERING SYSTEM</u>:**

**<u>PLANT</u>:**

**<u>TERM</u>:** This Individual Transaction Confirmation shall become effective on<u> </u> and continue for a term of<u> </u> years (the "<u>Primary Term</u>"), and thereafter continue in effect from Month to Month, until terminated by Producer or Gatherer giving the other Party written notice thirty (30) Days prior to the end of the Primary Term or any Month thereafter.

**<u>RECEIPT POINT(S)</u>:**

**<u>DELIVERY POINT(S)</u>:**

**<u>DEDICATED INTERESTS</u>:** As described on Exhibit "A" to this ITC.

**<u>MEMORANDUM</u>:** Gatherer<u> </u> [does]<u> </u> [does not] require the execution and filing of a Memorandum in connection with this ITC.

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**<u>CONDENSATE</u>:** Producer shall retain all Condensate that is collected as a liquid in Producer's gathering system upstream of the Receipt Point(s). Gatherer shall retain all Condensate that is collected as a liquid in Gatherer's Gathering System downstream of the Receipt Point(s), and title in such Condensate shall be vested in Gatherer at the point(s) at which it is collected or extracted from Gatherer's Gathering System. However, in the event of Force Majeure, to the extent Gatherer continues to process Gas at the Plant during a Force Majeure event affecting the recoveries of Component Plant Products, then with respect to the period during which such recoveries are affected, and Gatherer elects to compensate Producer based on actual recoveries pursuant to Section 16.4 of the Base Agreement, Gatherer shall account to Producer on the basis of the Component Plant Products actually recovered at the Plant and Producer's share of Condensate, rather than on the basis of the fixed Component Recovery Factors herein.

**<u>COMPONENT RECOVERY FACTORS</u>:**

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| | |
|:---|:---|
| <u>Component Plant Product</u> | <u>Component Recovery Factor</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ethane | [ ] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Propane | [ ] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iso-butane | [ ] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Normal butane | [ ] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pentanes Plus | [ ] |

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**<u>FEES & THROUGHPUT COMMITMENT(S)</u>:**

**<u>GATHERING AND PROCESSING FEE</u>:** $<u> </u> per MMBtu received at the Receipt Point(s)

**<u>FEE ESCALATION</u>:** Beginning with the first Day of the second Contract Year, and annually thereafter (the "<u>Escalation Date</u>"), all fees being charged under this Individual Transaction Confirmation shall increase by a percentage equal to the percentage of increase change between:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the seasonally unadjusted Consumer Price Index for All Urban Consumers (all items), U.S. city Average (1982-84 = 100), as published by the U.S. Department of Labor, Bureau of Labor Statistics (" <u>CPI-U</u> ") for the month of December of the second year prior to the Escalation Date; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the seasonally unadjusted CPI-U for the month of December immediately preceding the Escalation Date (the " <u>CPI Adjustment</u> ").

For example, the CPI-U published for December 2000 was 174.0 and the CPI-U published for December 2001 was 176.7, resulting in a percentage change of 1.5% as of January 1, 2002.

**<u>FL&U</u>:** Producer's pro rata share of actual FL&U (including electricity cost)

**<u>GATHERING FUEL</u>:** A fixed percentage of Producer's Receipt Point MMBtus and Mcf, as applicable shall be retained by Gatherer for Gathering Fuel as follows: (i)<u> </u> of Receipt Point MMBtu and Mcf, as applicable per stage of compression plus (ii)<u> </u> of Receipt Point MMBtu and Mcf, as applicable, for lost and unaccounted-for gas on Gatherer's system.

**<u>PRESSURE</u>:** Producer will deliver Gas to Gatherer, at the Receipt Point(s), at pressures sufficient to enter Gatherer's Gathering System against the operating pressures maintained in the Gathering System from time to time at the Receipt Point(s), but such delivery pressures may not exceed Gatherer's MAOP at such point. Gatherer shall not have any obligation to alter its pipeline pressures, provide compression, or modify its pipeline operations.

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**IN WITNESS WHEREOF**, the Parties hereto have caused this instrument to be executed in multiple originals effective and operative as of the date first hereinabove written.

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| | | | |
|:---|:---|:---|:---|
| **GATHERER** | **GATHERER** | **PRODUCER** | **PRODUCER** |
| **ETC TEXAS PIPELINE, LTD.** | **ETC TEXAS PIPELINE, LTD.** | **[**<u> </u>**<u>]</u>** | **[**<u> </u>**<u>]</u>** |
| **By: LG PL, LLC, its general partner** | **By: LG PL, LLC, its general partner** |  |  |
| By: | EXAMPLE, DO NOT EXECUTE | By: | EXAMPLE, DO NOT EXECUTE |
| Name: |  | Name: |  |
| Title: |  | Title: |  |
| Date: |  | Date: |  |

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**EXHIBIT** "**B**"

**GAS LIFT GAS DELIVERY AND SALES TERMS**

**TO THAT CERTAIN**

**GATHERING AND PROCESSING AGREEMENT**

**BETWEEN**

**ALPHA ENERGY, INC.**

**AND**

**ETC TEXAS PIPELINE, LTD.**

**DATED**

**AUGUST 1, 2022**

From time to time, Producer may request in writing that Gatherer construct and install gas lift meter(s) and all pipelines, valves, and related Facilities ("<u>Gas Lift Meter(s)</u>") required to measure and deliver Gas to Producer for gas lift ("<u>Gas Lift Gas</u>"), for Subject Well(s) covered by the Agreement ("<u>Designated Well(s)</u>"). Gatherer shall accept or decline such request in writing. If Gatherer accepts Producer's request, Gatherer shall at all times be the sole owner and operator of the Gas Lift Meter(s). Producer will pay Gatherer the sum of twenty-five thousand dollars ($25,000) as aid in construction for each Gas Lift Meter installed for a Designated Well. Upon receipt of such payment from Producer, Gatherer will proceed with the installation of the Gas Lift Meter in a timely manner consistent with Gatherer's normal operating practice.

In addition to the aid in construction payment set forth above, Producer shall pay Gatherer the Fee(s) set forth on an applicable ITC for gas lift services.

For purposes of assessing Fee(s) and Fuel(s) and determining amounts due, under Articles III & V of the Agreement, Gatherer shall deduct the quantity of Gas measured at the Gas Lift Meter from the quantity of Gas received from the Designated Well. In the event the quantity of Gas Lift Gas, in MMBtu, delivered to Producer over the course of a Month is greater than the quantity of Gas, in MMBtu, delivered from the Designated Well during the same Month, such excess MMBtu for such Month shall be referred to as "<u>Excess Gas Lift Gas</u>." Producer shall pay Gatherer as follows: ("<u>EGLG Value</u>"):

(A x B) + (C x D) = EGLG Value

Where:

A = the quantity of Residue Gas allocated to Producer attributable to the Excess Gas Lift Gas; and

B = the price that Gatherer pays to Producer for the purchase of Residue Gas hereunder, as set forth in the applicable ITC of this Agreement and

C = the quantity of Plant Products allocated to Producer attributable to the Excess Gas Lift Gas; and

D = the price that Gatherer pays to Producer for the purchase of Plant Products, as set forth in the applicable ITC of this Agreement.

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**EXHIBIT** "**C**"

**RESIDUE GAS NOMINATIONS AND IMBALANCE PROVISIONS**

**TO THAT CERTAIN**

**GATHERING AND PROCESSING AGREEMENT**

**BETWEEN**

**ALPHA ENERGY, INC.**

**AND**

**ETC TEXAS PIPELINE, LTD.**

**DATED**

**AUGUST 1, 2022**

C.1 Subject to the terms, conditions and limitations contained herein and in the ITC, Producer agrees to deliver, or cause to be delivered, to the Receipt Point(s), and Gatherer agrees to accept, or cause to be accepted, on an Allocated Service basis those daily quantities of Producer's Gas as set forth in any ITC, and scheduled in accordance with this Section. However, in no event shall Producer tender volumes of Gas for gathering and/or processing services hereunder on any Day in excess of the Scheduled Quantity (defined in Section C.2). Subject to the terms, conditions and limitations contained herein, Producer agrees to accept, or cause to be accepted, at the Delivery Point(s), and Gatherer agrees to gather, process and redeliver, or cause to be gathered, processed and redelivered, on an Allocated Service basis the Scheduled Quantity. The Scheduled Quantity at the Delivery Point(s) shall be a quantity of Gas equal to the remainder of the Scheduled Quantity at the Receipt Point(s) less Producer's FL&U and PTR. The maximum quantity of Gas that Gatherer is obligated to receive hereunder at the Receipt Point(s) and deliver hereunder at the Delivery Point(s) during any given hour of any Day is one twenty-fourths (1/24) of Producer's Scheduled Quantity at an instantaneous standard volumetric flow rate at any point in time during the hour. Any variation in flow rate or the Scheduled Quantity will be confirmed in writing via fax or email by Gatherer, with an acknowledgment returned to Gatherer by Producer.

C.2 Scheduling of receipts and deliveries of Gas between the Receipt Point(s) and Delivery Point(s) shall be in accordance with the Gatherer's nomination and scheduling procedures and with the nomination and scheduling procedures of the Downstream Transporter. Producer shall submit Nominations (as defined below) for the gathering of Gas hereunder to Gatherer in writing or via Gatherer's Web-based online nomination system as determined by Gatherer. No later than five (5) Business Days prior to the end of each Month, Producer shall provide to Gatherer in writing the quantity of Gas (expressed in MMBtu) that Producer expects to make available and deliver at each Receipt Point and receive at the Delivery Point(s) each Day of the following Month (the "<u>Nominations</u>"). Should Producer's desire to change any of the Nominations during such Month, Producer will notify Gatherer by no later than 7:30 a.m. CCT on the Business Day prior to the Day of the scheduled flow of the capacity and path that the Producer plans to utilize. The deadline for submitting Nominations is 7:30 a.m. CCT the Business Day prior to the Day of the scheduled flow. Any initial Nomination received after the deadline of 7:30 a.m. CCT on the Business Day prior to the flow Day will be scheduled by Gatherer in its discretion. Gatherer may, in its discretion, allow intraday Nomination changes at the Receipt Point(s) and the Delivery Point(s). Gas shall be delivered by Gatherer to the Delivery Point(s) in accordance with confirmation by the Downstream Transporter of the Nomination and/or changes to the Nomination (the "<u>Scheduled Quantity</u>").

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C.3 Any variance between the volumes of Gas delivered at the Delivery Point(s) for Producer's account and the volume of Gas received at the Receipt Point(s) (less any FL&U and PTR) the "<u>Imbalance</u>" will be recorded in a Gas Imbalance Account. If the absolute volume in the Gas Imbalance Account is greater than a plus or minus MMBtu tolerance specified in any ITC ("<u>Cumulative Operational Imbalance Tolerance</u>"), then, at Gatherer's election, Producer shall pay Gatherer an amount equal to a dollar value specified in each ITC multiplied by the quantity in the Gas Imbalance Account exceeding the Cumulative Operational Imbalance Tolerance for each Month such event occurs, ("<u>Cumulative Operational Imbalance Fee</u>"). Any physical flow adjustments will be made as agreed to by Gatherer (which shall be confirmed in writing via fax or email by Gatherer, with an acknowledgment to be returned to Gatherer by Producer's) to adequately control imbalance levels. The daily and cumulative Imbalance(s) will be determined at the end of each Gas Day. Gatherer may assist Producer in managing the Imbalance and may, at any time and from time to time, request that Producer change its Nominations at the Delivery Point(s) or, with notice to Producer, restrict, interrupt, or reduce its receipts or deliveries of Gas at the Receipt Point(s) or Delivery Point(s), and direct Producer to make adjustments in its receipts or deliveries, in order to maintain a daily, hourly and monthly balance or to correct an Imbalance. If Producer fails or refuses to follow any such request from Gatherer, Gatherer may, without liability hereunder, cease accepting or delivering Gas under this Agreement until the conditions causing the Imbalance are corrected. Notwithstanding the foregoing, in the event that Gatherer is assessed a cash out penalty by the Downstream Transporter, which is attributable to Producer, Producer shall reimburse Gatherer for the actual amount of such cash out penalty.

C.4 <u>Imbalances</u>. The term "<u>Imbalance</u>" means the cumulative difference in a Month between: (i) the quantity of Gas in MMBtu received for the account of Producer at the Receipt Point(s), less the quantity of Gas retained by Gatherer for FL&U, if any, Process Shrinkage and Process Fuel, and (ii) the quantity of Gas in MMBtu delivered for the account of Producer at the Delivery Point(s). After any adjustment for Fuel and Process Shrinkage, if the Imbalance is the result of receipts at the Receipt Point(s) exceeding the delivered (or scheduled, as applicable) quantity of Gas for Producer's account at the Delivery Point(s), it is a "<u>Positive Imbalance</u>." If the Imbalance is the result of receipts at the Receipt Point(s) being lower than the delivered quantity of Gas for Producer's account at the Delivery Point(s), it is a "<u>Negative Imbalance</u>." Imbalances will be cashed out on a Monthly basis.

C.5 <u>Cash Out</u>. The cash-out settlement price will be the monthly arithmetical average of the prices ("<u>Cash-Out Price</u>") received by Gatherer for sales at the Delivery Point(s) made on a daily basis. Gatherer will pay Producer an amount that is the product of the Positive Imbalance each Month, if any, and the Cash-Out Price. Producer will pay Gatherer an amount that is the product of the Negative Imbalance each Month, if any, and the Cash-Out Price. If the actual monthly volume varies by more than five percent (5%) from the delivered volumes for the Month, then the Cash-Out Price will be adjusted as follows:

(1) For Negative Imbalances, the Cash-Out Price will be increased by the percentage variance, rounded up to the nearest whole percentage point, between the Delivery Point volumes and the adjusted Receipt Point(s) volumes. [i.e., if the adjusted receipt volume from Producer is seven percent (7%) less than the Delivery Point volume, then the Cash-Out Price will be increased by seven percent (7%)]; and

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(2) For Positive Imbalances, the Cash-Out Price will be decreased by the percentage variance, rounded up to the nearest whole percentage point, between the Delivery Point volumes and the adjusted Receipt Point(s) volumes. [i.e., if the adjusted receipt volume from Producer is seven percent (7%) greater than the Delivery Point volume, then the Cash-Out Price will be decreased by seven percent (7%)].

Gatherer shall notify Producer as soon as reasonably practicable: (i) if there is a Force Majeure event that materially affects Gatherer's ability to accept Producer's Gas for forty-eight (48) hours or more, and (ii) to the extent Gatherer has information as to the duration of such event, Gatherer shall provide Producer that information and updates to such information.

C.6 <u>Allocations</u>. Producer recognizes that quantities of Gas are delivered through the Delivery Point(s) for third parties, and therefore, the scheduling of Gas under this Agreement may involve the allocation of Gas deliveries. As between Gatherer and Producer, Gatherer will determine the allocation for all Gas deliveries hereunder.

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**EXHIBIT** "**D**"

**TREATING FEE(S) AND FUEL(S)**

**TO THAT CERTAIN**

**GATHERING AND PROCESSING AGREEMENT**

**BETWEEN**

**ALPHA ENERGY, INC.**

**AND**

**ETC TEXAS PIPELINE, LTD.**

**DATED**

**AUGUST 1, 2022**

**<u>TREATING FEE(S) AND FUEL(S)</u>:** Fee(s) and Fuel(s) to be paid by Producer to Gatherer per Receipt Point MMBtu, if applicable, shall be equal to the rates as set forth below.

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| | | |
|:---|:---|:---|
| **<u>H2S Level PPM</u>** | **<u>Fee: $ per MMBtu</u>** | **<u>Fuel: %</u>** |
| 0.000 – 4.0 | 0.000 | 0.00 |
| 4.001 – 10.0 | 0.075 | 0.10 |
| 10.001 – 20.0 | 0.085 | 0.20 |
| 20.001 – 30.0 | 0.095 | 0.30 |
| 30.001 – 40.0 | 0.105 | 0.40 |
| 40.001 – 50.0 | 0.115 | 0.50 |
| 50.001 – 60.0 | 0.125 | 0.60 |
| 60.001 – 70.0 | 0.135 | 0.70 |
| 70.001 – 80.0 | 0.145 | 0.80 |
| 80.001 – 90.0 | 0.155 | 0.90 |
| 90.001 – 100.0 | 0.165 | 1.00 |
| 100.001 – 500.0 | 0.250 | 1.20 |
| 500.001 – 1000.0 | 0.350 | 1.50 |
| 1000.001 – 2000.0 | 0.450 | 1.70 |
| Over 2000.0 | 0.550 | 2.00 |
| **<u>CO2 MOL %</u>** | **<u>Fee: $ per MMBtu</u>** | **<u>Fuel: %</u>** |
| 0.0000% - 2.00% | 0.000 | 0.00 |
| 2.0001% - 2.50% | 0.060 | 0.50 |
| 2.5001% - 3.00% | 0.075 | 0.75 |
| 3.0001% - 3.50% | 0.090 | 1.00 |
| 3.5001% - 4.00% | 0.120 | 1.25 |
| Over 4.00% | 0.150 | 1.50 |
| **<u>N2 MOL %</u>** | **<u>Fee: $ per MMBtu</u>** | **<u>Fuel: %</u>** |
| 0.0000% - 2.00% | 0.000 | 0.00 |
| 2.0001% - 2.50% | 0.060 | 0.50 |
| 2.5001% - 3.00% | 0.075 | 0.75 |
| 3.0001% - 3.50% | 0.090 | 1.00 |
| 3.5001% - 4.00% | 0.120 | 1.25 |
| Over 4.00% | 0.150 | 1.50 |

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**EXHIBIT** "**E**"

**FORM OF MEMORANDUM OF GATHERING AND PROCESSING AGREEMENT**

**TO THAT CERTAIN**

**GATHERING AND PROCESSING AGREEMENT**

**BETWEEN**

**ALPHA ENERGY, INC.**

**AND**

**ETC TEXAS PIPELINE, LTD.**

**DATED**

**AUGUST 1, 2022**

**MEMORANDUM OF GATHERING AND PROCESSING AGREEMENT**

**NOTICE OF CONFIDENTIALITY: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS:** YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE NUMBER. (This Notice is required by Section 11.008 of the Texas Property Code)

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| | | |
|:---|:---|:---|
| THE STATE OF TEXAS | § |  |
|  | § | KNOW ALL MEN BY THESE PRESENTS: |
| [COUNTY/COUNTIES] OF | § |  |
|  | § |  |

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This Memorandum of Gathering and Processing Agreement (this "**<u>Memorandum</u>**") is entered into by and between ETC TEXAS PIPELINE, LTD., a Texas limited partnership ("**<u>Gatherer</u>**") and [PRODUCER NAME], a<u> </u> ("**<u>Producer</u>**").

This Memorandum is being executed in connection with that certain Individual Transaction Confirmation #<u> </u>-<u> </u> dated effective<u> </u> 1, 20<u> </u> executed by and between Gatherer and Producer (the "ITC") pursuant to that certain Gathering and Processing Agreement #<u> </u>-<u> </u> by and between Gatherer and Producer, dated as of<u> </u><u> </u> 1, 20<u> </u> (the "Base Agreement"). The ITC, Base Agreement and this Memorandum, together with any Appendices and Exhibits attached thereto shall constitute a single integrated agreement (collectively, this "**<u>Agreement</u>**"). All capitalized terms used but not defined in this Memorandum shall have the meanings given them in the Base Agreement or ITC, as applicable.

Among other things, the Agreement provides that Producer (a) exclusively DEDICATES AND COMMITS to Gatherer (i) all Producer's Interest now owned or hereafter acquired by Producer and/or its Affiliates in all Gas reserves in, under or attributable to the Dedicated Acreage, the Subject Lease(s) and the Subject Well(s) (including the Dedicated Interests described on <u>Exhibit</u> <u>"</u><u>A</u><u>"</u> hereto, the "<u>Dedicated Interests</u>") and (ii) all Gas now owned or otherwise controlled by Producer and/or its Affiliates that is produced from the Dedicated Interests or lands pooled or unitized therewith ("<u>Dedicated Gas</u>"), (b) GRANTS, TRANSFERS, and CONVEYS to Gatherer, from and out of Producer's and its Affiliates' real property rights in the Dedicated Interests, the sole and exclusive right to perform gathering, processing, and/or other services hereunder with respect to the Dedicated Interests and Dedicated Gas, and (c) further agrees to exclusively deliver, or cause to be delivered, to Gatherer, at the Receipt Point(s) all Dedicated Gas as and when produced (the foregoing dedications, conveyances and agreements described in clauses (a) through (c), together with the I&E Easement, collectively, the "<u>Dedication</u>").

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The Dedication constitutes a covenant running with the land and the Dedicated Interests, as a benefit and a burden on Producer's title thereto, and running with the Gathering System, as a benefit to and a burden on Gatherer's title thereto, and inuring to the benefit of assignees of, and successors-in-interest to, the Dedicated Interests and the Gathering System, as applicable. The Dedication further constitute equitable servitudes burdening the Dedicated Interests, and the Parties have agreed that such Dedication and commitment and all of the terms and provisions of this Agreement with respect to any Dedicated Interest existing as of the date of this Memorandum shall be deemed fully vested, and further agree that future interests in the Dedicated Interests shall vest upon Producer's or its Affiliates' acquisition of such Dedicated Interests. The Dedication is intended to be a conveyance, on its own, of a real property interest out of and burdening the Dedicated Acreage, as a covenant running therewith, and survives any early termination (or purported termination) hereof that is not expressly provided for herein, and will thereafter be and remain enforceable by Gatherer and its successors and assigns through equitable remedies, including specific performance. The Parties have acknowledged and agreed that for the Term of this Agreement, the Dedication and all of the terms and provisions of this Agreement collectively (1) touch and concern the Dedicated Interests, (2) relate to the Dedicated Interests in existence and specifically bind the Parties and their successors and assigns pursuant to this Article IV, (3) are intended to be covenants running with the land, (4) constitute a restrictive covenant and equitable servitudes upon the Dedicated Interests, (5) are contained in a dedication and commitment of a real property interest in the Dedicated Interests, thereby establishing privity of estate, (6) are for the benefit of Producer, Gatherer, and their respective Affiliates, successors, and assigns, and (7) are intended, along with the other terms and conditions of this Agreement, to survive any bankruptcy or insolvency of Producer. It is the intention of the Parties that the Dedication constitutes an affirmative burden on a real property interest of Producer in favor of Gatherer and that, notwithstanding any other provision of this Agreement, in order of priority: (x) the terms and provisions of this Agreement shall not be subject to separate and independent rejection under Section 365 of the Bankruptcy Code, and (y) in the terms and provisions of this Agreement shall not be subject to rejection under Section 365 of the Bankruptcy Code.

Further, each Party has acknowledged that a breach of the Dedication obligations and covenant running with the land would cause irreparable harm and significant injury to Gatherer. Accordingly, Producer and Gatherer have acknowledged that in the event of such a breach of Producer's Dedication obligations, money damages are not an adequate remedy for a breach. Accordingly, the Parties have agreed that Gatherer and its successors and assigns and Producer will have the right to seek specific performance and/or injunctive relief to enforce the obligations in this Agreement, including, but not limited, to the right to specifically enforce Producer's exclusive Dedication of the Dedicated Interests in addition to any other rights and remedies it may have at law or in equity. Moreover, each of the Parties has waived and agreed to be estopped in equity from any argument that the other Party (and its successors and assigns) is not entitled to seek injunctive relief and specific performance.

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To the maximum extent under the Subject Lease(s) and to the maximum extent Producer or its lease operator may have any rights however derived (whether from an oil and gas lease, easement, governmental agency order, regulation, statute, or otherwise), Producer has ASSIGNED, TRANSFERRED, GRANTED and CONVEYED and caused each Affiliate owning any Dedicated Interests to ASSIGN, TRANSFER, GRANT and CONVEY, without warranty of title, either express or implied, to Gatherer and Gatherer's gas gathering contractor, if any, and their respective successors and assigns, out of Producer's right, title and interest in and to the real property constituting the Dedicated Interests (whether a fee simple absolute, fee simple determinable, easement, equitable servitude, leasehold and/or other estate or interest in real property) and for the duration of the term of this Agreement, easements and right of way upon such portions of the lands covered by the Dedicated Interests or, where applicable, other right to lay and maintain pipelines, meters, and any equipment on such real property, in each case as reasonably necessary in connection with the Gathering System or the fulfillment of Gatherer's rights and obligations hereunder, including without limitation the purchase or handling of Producer's Gas (the "<u>I&E Easement</u>"); provided that the I&E Easement is subject to Producer's or its Affiliates' use of any of the property for its operations or the valid prior rights of third parties and the requirements of the applicable lease (including financial requirements) or other vesting instrument, if any, from which Producer's applicable right, title or interest arises. All pipelines, meters, and other equipment placed by Gatherer or Gatherer's contractors on the lands and leases remain the property of Gatherer, and Gatherer may remove them at any time consistent with its obligations under this Agreement.

The Dedicated Interests, Dedicated Acreage, Subject Lease(s) and Subject Well(s) are comprised of that certain real property more fully described in <u>Exhibit</u> <u>"</u><u>A</u><u>"</u> attached hereto.

More information regarding the terms of the Agreement, including the Dedication, can be obtained from Gatherer at the following address:

ETC Texas Pipeline, Ltd.

8111 Westchester Drive, Suite 600

Dallas, Texas 75225

Attn:<u> </u>

Phone:<u> </u><u> </u>

Email:<u> </u>@energytransfer.com

This Memorandum is executed, acknowledged and delivered by Producer and Gatherer for the purpose of evidencing of record the existence of the Agreement and certain terms thereof, and shall not alter, affect, amend or change any terms or provisions of the Agreement.

This Memorandum may be executed in multiple counterparts, each of which shall constitute an original, and all of which, when taken together, shall constitute one instrument.

*[Signature Pages Follow This Page]*

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EXECUTED as of the date of the Parties' acknowledgments below but to be EFFECTIVE as of the<u> </u> day of<u> </u>, 20<u> </u>.

**PRODUCER:**

[PRODUCER], a<u> </u>

By: <u>EXAMPLE, DO NOT EXECUTE</u>

Name:<u> </u>

Title:<u> </u>

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|:---|:---|
| **THE STATE OF** <u> </u> | **§** |
|  | **§** |
| **COUNTY OF** <u> </u> | **§** |

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This instrument was acknowledged before me on<u> </u>, 20<u> </u> by<u> </u>, the<u> </u> of [PRODUCER], a<u> </u>, on behalf of said limited liability company.

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| |
|:---|
| Notary's Signature |
| (Name typed or printed) |
| Commission Expires: |

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**GATHERER:**

ETC TEXAS PIPELINE, LTD., a Texas limited partnership

By: LG PL, LLC, its general partner

By: <u>EXAMPLE, DO NOT EXECUTE</u>

Name:<u> </u>

Title:<u> </u>

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| | |
|:---|:---|
| **THE STATE OF** <u> </u> | **§** |
|  | **§** |
| **COUNTY OF** <u> </u> | **§** |

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This instrument was acknowledged before me on<u> </u><u> </u>, 20<u> </u> by<u> </u>, the<u> </u> of LG PL, LLC, the general partner of ETC Texas Pipeline, Ltd., a Texas limited partnership, on behalf of said limited partnership.

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| |
|:---|
| Notary's Signature |
| (Name typed or printed) |
| Commission Expires: |

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**<u>After recording, return to:</u>**

<u> </u>

<u> </u>

<u> </u>

<u> </u>

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**<u>EXHIBIT</u>** <u>"</u>**<u>A</u>**<u>"</u>

**<u>to Memorandum of Gathering and Processing Agreement</u>**

**<u>Description of Dedicated Interests</u>**

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**<u>AID IN CONSTRUCTION AGREEMENT</u>**

**[C-22012-WC-21300255] (**"**WBS Number**"**) Include WBS Number on Payment**

This Aid in Construction Agreement (this "Agreement") is entered into as of this 1<sup>st</sup> day of November, 2022, by and between **ETC TEXAS PIPELINE, LTD.**, a Texas limited partnership ("Gatherer"), and **ALPHA ENERGY, INC.** ("Producer").

This Agreement is supplemental to, and subject to the terms of, that certain Gathering and Processing Agreement dated August 1, 2022, Gatherer's Contract Number 2153-100, and Individual Transaction Confirmation Number 2153-101 dated August 1, 2022, as may have been amended, covering the Logan County 2-20, Gatherer's Meter Number 090-22041, Logan County 11-6, Gatherer's Meter Number 090-21992, and Logan County 11-21, Gatherer's Meter Number 090-22050 ("Well(s)"), located in Logan County, Oklahoma.

I. At Producer's expense and per Producer's request, Gatherer will construct and install an Electronic Flow Meter and all pipelines, valves, and related facilities ("EFM Equipment") required to measure and deliver gas to Producer for each of the Wells. Gatherer shall own, operate, and maintain the EFM Equipment.

II. Producer will pay Gatherer the sum of $13,800.00 ($4,600.00 per Well), as seen on the invoice attached hereto, as aid in construction. The WBS Number shall be included in the subject line of the check, or the Originator to Beneficiary Information ("OBI") line of the ACH or Wire Transfer. Upon receipt of such payment from Producer and execution of both the First Amendment to Individual Transaction Confirmation and this Agreement, Gatherer will proceed with the installation of the EFM Equipment in a timely manner consistent with Gatherer's normal operating practice.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

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| | |
|:---|:---|
| **GATHERER:** | **PRODUCER:** |
| **ETC TEXAS PIPELINE, LTD.** | **ALPHA ENERGY, INC.** |
| **By: LG PL, LLC, its general partner** |  |
| ![x01.jpg](x01.jpg) | ![x02.jpg](x02.jpg) |

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![x03.jpg](x03.jpg)

## Exhibit 10.15

**Exhibit 10.15**

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ![etlogo.jpg](etlogo.jpg) | **Energy Transfer Crude Marketing LLC** |

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**ETCM # ALPHC22TP0001**

**CRUDE OIL PURCHASE AGREEMENT**

This Crude Oil Purchase Agreement (this "<u>Agreement</u>") is made and entered into as of June 7, 2022 (the "<u>Agreement Date</u>") based on terms agreed to by Brenna Wilson of Energy Transfer Crude Marketing LLC, a Texas limited liability company ("<u>Buyer</u>") and Joe Kelloff of Alpha Energy Texas Operating, LLC ("<u>Seller</u>" and, together with Buyer, each, a "<u>Party</u>," and collectively, the "<u>Parties</u>").

WHEREAS, Seller owns or is authorized to sell all of the volumes of crude oil and/or condensate (referred to in this Agreement as "<u>Crude Oil</u>" for convenience whether crude oil or condensate) produced from the properties ("<u>Properties</u>") described in the Exhibit attached hereto and made a part hereof; and

WHEREAS, Buyer desires to purchase and receive all Dedicated Crude Oil (as defined below) and Seller desires to sell and deliver all such Dedicated Crude Oil in accordance with the terms of this Agreement;

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, together with other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Term</u>. Unless otherwise terminated in accordance with the terms of this Agreement, this Agreement shall be effective as of the earlier of (i) the Agreement Date and (ii) the Commencement Date, and the primary term ("Primary Term") of this Agreement shall commence on May 1, 2022 (the "Commencement Date") and continue in effect for one (1) month. Immediately following the Primary Term, this Agreement shall automatically continue from month to month thereafter (each such month, a "Successive Term"), unless and until terminated at the end of the Primary Term or any Successive Term, as applicable, by either Party by giving at least thirty (30) days' advance written notice of termination to the other Party. The Primary Term and any and all Successive Terms shall be collectively referred to as the "Term".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Quantity</u>. Subject to the provisions hereof, during each month during the Term Seller shall sell to Buyer and hereby commits and dedicates to the performance of this Agreement all of Seller's right, title, and interest to Crude Oil in place in, under, or attributable to the Properties, and Seller further commits and dedicates to the performance of this Agreement, and Buyer shall purchase from Seller, all of the Crude Oil owned or controlled by Seller or any other entity directly or indirectly controlling, controlled by, under common control with, or otherwise affiliated with Seller (each an "<u>Affiliate</u>"), or that Seller or its Affiliate(s) has the right and authority to sell and deliver, that is produced from the Properties during each month of the Term (such Crude Oil referenced in this Section 2, the "<u>Dedicated Crude Oil</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. RESERVED.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Delivery Point, Title, and Risk of Loss</u>. Delivery shall take place and title to, and risk of loss of, the Dedicated Crude Oil shall pass from Seller to Buyer when the Dedicated Crude Oil passes the outlet flange of Seller's applicable lease facility to the applicable receiving equipment of Buyer or Buyer's designated agent (each a "<u>Delivery</u> <u>Point</u>").

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1300 Main Street \| Houston, Texas 77002 \| (713) 989-7000

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Warranty of Title and Authority to Sell</u>. Seller hereby represents and warrants (i) good title, free and clear of all liens and encumbrances, to the Crude Oil sold and delivered under this Agreement that is owned or controlled by Seller or its Affiliate(s) and (ii) that as to the remaining portion of the Crude Oil sold and delivered hereunder, Seller has the right and authority to sell and deliver said Crude Oil for the benefit of the true owners thereof. Seller further represents and warrants that the Crude Oil has been produced, handled, and transported to the Delivery Point(s) hereunder in accordance with all applicable laws, rules and regulations of all governmental authorities having jurisdiction thereof. **SELLER AGREES TO PROTECT, DEFEND, INDEMNIFY AND HOLD HARMLESS BUYER AND ITS AFFILIATES FROM AND AGAINST ALL CLAIMS, DEMANDS, SUITS, DEBTS, ACCOUNTS, PENALTIES, INTEREST (INCLUDING BUT NOT LIMITED TO INTEREST OWED AS A RESULT OF DELAYED OR UNTIMELY PAYMENT OF PROCEEDS BY SELLER UNDER ANY APPLICABLE LAW), DAMAGES, COSTS, LOSSES, EXPENSES (INCLUDING BUT NOT LIMITED TO, REASONABLE ATTORNEY**'**S FEES) AND CAUSES OF ACTION OF EVERY KIND AND CHARACTER, THAT BUYER MAY SUFFER OR INCUR ARISING OUT OF OR IN CONNECTION WITH (I) ANY BREACH OF ANY REPRESENTATION OR WARRANTY MADE BY SELLER UNDER THIS AGREEMENT; (II) ANY CLAIMS BY WORKING INTEREST OWNERS, ROYALTY OWNERS OR OTHER THIRD PARTIES RELATED TO THE OWNERSHIP OF OR TITLE TO THE CRUDE OIL; (III) ANY CLAIMS BY WORKING INTEREST OWNERS, ROYALTY OWNERS OR OTHER THIRD PARTIES RELATED TO THE METHOD OR MANNER IN WHICH THE PRODUCER OR SELLER CHARGES EXPENSES RELATED TO THE CRUDE OIL; (IV) ANY LIENS OR ENCUMBRANCES ASSERTED AGAINST THE CRUDE OIL, INCLUDING THOSE ARISING OUT OF OR IN CONNECTION WITH ANY APPLICABLE OIL AND GAS LIEN LAWS); (V) SELLER**'**S FURTHER DISTRIBUTION OF OIL AND GAS PROCEEDS TO OWNERS LEGALLY ENTITLED THERETO PURSUANT TO APPLICABLE LAW; AND/OR (VI) PAYMENT OF SUCH PROCEEDS TO APPROPRIATE STATES AS UNCLAIMED PROPERTY PURSUANT TO APPLICABLE LAW. SELLER**'**S OBLIGATIONS IN THE PRECEDING SENTENCE APPLY REGARDLESS OF SOLE, JOINT OR CONCURRENT NEGLIGENCE OF BUYER.**

Notwithstanding anything to the contrary contained in this Agreement, in the event of a dispute or claim arising out of or in connection with the ownership of, or a dispute or claim regarding the right to receive proceeds of the Crude Oil that is sold under this Agreement, Buyer shall be entitled to suspend any or all payments to Seller until the resolution of such dispute, without prejudice to any other right or remedy available to Buyer under this Agreement or applicable law, and Seller hereby specifically gives approval to Buyer for such suspension and agrees not to challenge any such suspension from Buyer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Price</u>. For Dedicated Crude Oil sold and delivered by Seller and received and purchased by Buyer in accordance with this Agreement, the price per barrel from each Property for each month shall be the value determined by the Pricing Formula modified by the Net Adjustment stated in the Exhibit for such Property.

The per-barrel price shall be the United States Dollar price determined in accordance with the above will be rounded to the nearest 4 decimals. For pricing purposes, any Dedicated Crude Oil delivered hereunder shall be deemed to have been delivered in equal daily quantities, and the price as described above shall be based on the prices in effect during the calendar month in which deliveries occur.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Payment Terms and Netting</u>. After verification of deliveries received by Buyer in compliance with this Agreement, payment for Dedicated Crude Oil sold and delivered hereunder will be made to Seller on or about the 20<sup>th</sup> day of the month following the month of delivery, subject to payment owed to Buyer under this Agreement as a result of negative pricing, any Deficiency Payment, fees related to truck load rejection, or other costs, charges, and offsets, as applicable. In the event that net payment is due to Buyer as a result of negative pricing or other costs, charges, and offsets, as applicable, payment hereunder will be made to Buyer on or about the 20<sup>th</sup> day of the month following the month of delivery. If the payment date falls on a Saturday, or bank holiday other than a Monday, payment shall be due on the preceding banking day; *provided that*, if the bank(s) from which a Party routinely makes payment to contract counterparties is unable to process payments or is closed due to an event that would constitute an event of Force Majeure for other purposes of this Agreement, whether declared or not, payment shall be due, as applicable, on the first day that the bank(s) resume payment processing or the first banking day immediately following the date such payment would otherwise have been due hereunder. If payment falls on a Sunday or a Monday bank holiday, payment shall be due on the succeeding business day.

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For clarity, in the event that Buyer and Seller are each required to pay an amount under this Agreement, then Buyer may aggregate such amounts with respect to each Party and the Parties shall discharge their obligations to pay through netting, in which case the Party, if any, owing the greater amount shall pay to the other Party the difference between the amounts owed as determined by Buyer; provided however, if Buyer is the owing Party Buyer shall pay Seller the amount owed less Severance Tax in respect of or applicable to Crude Oil delivered in the delivery month under this Agreement, and Seller hereby agrees to make timely and accurate payments and/or accounting, as applicable, to all working and royalty interest owners of the Dedicated Crude Oil and comply with all applicable laws. If Seller is the owing Party, Seller's failure to pay under this Agreement shall constitute a material breach of this Agreement and, without waiving Buyer's other remedies provided under this Agreement, Buyer shall have the right to offset any future amounts due Seller until Seller has paid Buyer in full for the shortfall. **SELLER AGREES TO PROTECT, DEFEND, INDEMNIFY AND HOLD HARMLESS BUYER AND ITS AFFILIATES FROM AND AGAINST ALL CLAIMS, DEMANDS, SUITS, DEBTS, ACCOUNTS, PENALTIES, INTEREST (INCLUDING BUT NOT LIMITED TO INTEREST OWED AS A RESULT OF DELAYED OR UNTIMELY PAYMENT OF PROCEEDS BY SELLER UNDER ANY APPLICABLE LAW), DAMAGES, COSTS, LOSSES, EXPENSES (INCLUDING BUT NOT LIMITED TO, REASONABLE ATTORNEY**'**S FEES) AND CAUSES OF ACTION OF EVERY KIND AND CHARACTER, THAT BUYER MAY SUFFER OR INCUR ARISING OUT OF OR IN CONNECTION WITH (I) ANY BREACH OF ANY REPRESENTATION OR WARRANTY MADE BY SELLER UNDER THIS AGREEMENT; (II) ANY CLAIMS BY WORKING INTEREST OWNERS, ROYALTY OWNERS OR OTHER THIRD PARTIES RELATED TO THE OWNERSHIP OF OR TITLE TO THE CRUDE OIL; (III) ANY CLAIMS BY WORKING INTEREST OWNERS, ROYALTY OWNERS OR OTHER THIRD PARTIES RELATED TO THE METHOD OR MANNER IN WHICH THE PRODUCER OR SELLER CHARGES EXPENSES RELATED TO THE CRUDE OIL; (IV) ANY LIENS OR ENCUMBRANCES ASSERTED AGAINST THE CRUDE OIL, INCLUDING THOSE ARISING OUT OF OR IN CONNECTION WITH ANY APPLICABLE OIL AND GAS LIEN LAWS); (V) SELLER**'**S FURTHER DISTRIBUTION OF OIL AND GAS PROCEEDS TO OWNERS LEGALLY ENTITLED THERETO PURSUANT TO APPLICABLE LAW; AND/OR (VI) PAYMENT OF SUCH PROCEEDS TO APPROPRIATE STATES AS UNCLAIMED PROPERTY PURSUANT TO APPLICABLE LAW. SELLER**'**S OBLIGATIONS IN THE PRECEDING SENTENCE APPLY REGARDLESS OF SOLE, JOINT OR CONCURRENT NEGLIGENCE OF BUYER.**

Notwithstanding anything to the contrary contained in this Agreement, in the event that Seller owes Buyer any payments (including but not limited to, any fee related to truck load rejection, any damages or indemnity payments, or payments resulting from negative pricing) pursuant to this Agreement, or any other agreements between the Parties, Buyer may invoice Seller for any amounts due from under this Agreement and Seller shall make payment within ten (10) business days after delivery of Buyer's invoice. Buyer also has the right to offset such amounts owed against any payments due to Seller under this Agreement, without prejudice to any other right or remedy available to Buyer under this Agreement or applicable laws, and Seller hereby gives approval to Buyer for such setoff and agrees not to challenge the same.

Any and all payments that have not been disputed or challenged in writing, with all supporting documentation, within twenty-four (24) months from the last day of the month of delivery shall be conclusively deemed to be correct and accurate and no retroactive adjustment shall be made beyond such twenty-four (24) month period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. RESERVED

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Taxes</u>. For all purposes in this Agreement, the term "<u>Taxes</u>" shall mean (a) all severance, production and similar taxes levied, assessed or fixed by any governmental authority in respect of or applicable to Crude Oil delivered under this Agreement (collectively the "<u>Severance Tax</u>"), (b) all income, franchise and similar taxes incurred by or imposed on Seller, any of its Affiliates, or any of its or their direct or indirect owners, (c) all payroll taxes related to employees of Seller, any of its Affiliates, or any of its or their direct or indirect owners, (d) all ad valorem taxes associated with Seller's or its Affiliates' facilities and (e) any and all other taxes imposed on or with respect to Crude Oil delivered under this Agreement that arise upstream of the Delivery Point(s). The term "<u>Tax</u>" shall have the correlative meaning.

Buyer is hereby authorized to withhold from the proceeds, if any, allocable to the sale and delivery of Crude Oil hereunder all Severance Tax applicable to Crude Oil delivered under this Agreement. In the event that Buyer's withholdings from the net sale proceeds is insufficient to pay all Severance Tax, Seller shall be responsible for the deficit and promptly pay Buyer the deficit amount or reimburse Buyer, as applicable. It is Seller's sole obligation and responsibility to notify Buyer of any tax-exempt interests or other material tax-related information or updates so that such taxes can be reported and paid correctly. Except as provided above, all Taxes are Seller's responsibility. **SELLER AGREES TO PROTECT, DEFEND, INDEMNIFY AND HOLD HARMLESS BUYER AND ITS AFFILIATES FROM AND AGAINST ALL CLAIMS, DEMANDS, SUITS, DEBTS, ACCOUNTS, PENALTIES, INTEREST (INCLUDING BUT NOT LIMITED TO INTEREST OWED AS A RESULT OF DELAYED OR UNTIMELY PAYMENT OF TAXES BY OR ON BEHALF OF SELLER UNDER ANY APPLICABLE LAW), DAMAGES, COSTS, LOSSES, EXPENSES (INCLUDING BUT NOT LIMITED TO, REASONABLE ATTORNEY**'**S FEES) AND CAUSES OF ACTION OF EVERY KIND AND CHARACTER, THAT BUYER MAY SUFFER OR INCUR ARISING OUT OF OR IN CONNECTION WITH ANY TAX- RELATED OBLIGATIONS OF SELLER.**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. <u>Trucking Requirements</u>. The Trucking Addendum attached hereto is incorporated by reference herein and made a part hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. <u>Quality Requirements</u>. Seller acknowledges and agrees that Buyer has the unilateral right (but not the obligation) to suspend and/or terminate accepting any or all deliveries including but not limited to, any future deliveries, and/or suspend and/or terminate this Agreement, at any time, and seek damages and/or other remedies at any time, if in Buyer's sole discretion, the Crude Oil received under this Agreement does not meet or exceed the Crude Oil quality requirements of this Agreement. Further, Seller acknowledges and agrees that Buyer and/or its representatives shall have the right (but not the obligation) to sample Crude Oil at any time prior to purchase, or during the term of this Agreement, for any purpose, including but not limited to, testing for compliance with the quality requirements of this Agreement. Buyer may reject all or any part of the delivery(ies) or future deliveries if Crude Oil does not meet the quality requirements of this Agreement, in addition to any and all other remedies available to Buyer in contract, law or otherwise. In addition, Buyer also has the right (but not the obligation) to dispose of Crude Oil contaminated by organic chlorides or other substances foreign to virgin Crude Oil or other non-naturally occurring chemicals ("<u>Contaminated Crude Oil</u>") and all expenses, costs and liabilities related to Contaminated Crude Oil shall be on account of Seller. Seller agrees to promptly provide any information related to H2S quantities in its Crude Oil, as well as VPCR and Gravity, if applicable. In the event of a delay or refusal by Seller to provide any requested information, Buyer shall have the right to order samplings and testings as it deems fit, and Seller shall be responsible for all costs and expenses therefor. Acceptance of Crude Oil that does not meet the quality requirements of this Agreement shall in no way affect Buyer's rights and remedies for off-specification Crude Oil or be considered a waiver of any of its rights or remedies. Buyer shall not be obligated to pay for Contaminated Crude Oil, as determined by Buyer at its sole discretion. **SELLER AGREES TO PROTECT, DEFEND, INDEMNIFY AND HOLD HARMLESS BUYER AND ITS AFFILIATES FROM AND AGAINST ALL CLAIMS, DEMANDS, SUITS, DEBTS, ACCOUNTS, PENALTIES, INTEREST, DAMAGES, COSTS, LOSSES, EXPENSES (INCLUDING BUT NOT LIMITED TO, REASONABLE ATTORNEY**'**S FEES) AND CAUSES OF ACTION OF EVERY KIND AND CHARACTER, THAT BUYER MAY SUFFER OR INCUR ARISING OUT OF OR IN CONNECTION WITH SELLER**'**S BREACH OF ANY QUALITY REQUIREMENTS OR QUALITY- RELATED OBLIGATIONS UNDER THIS AGREEMENT.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. <u>Notices</u>. All notices, statements or other communications to be given, submitted or made by either Party to the other shall be sufficiently given if in writing and when (a) served by certified, registered or express mail or by reputable, overnight courier service upon the Party for whom intended, or (b) sent by electronic mail to the Party for whom intended at the email address of such Party if specified below in this section and if to Buyer shall include Buyer's Contract Number provided on the first page. Either Party may change its information for the purpose set forth in this section upon giving at least 15 days' prior written notice to the other Party.

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp; <u>Buyer:</u><br> *Contract Administration & Legal notices:*<br> Energy Transfer Crude Marketing LLC<br> 1300 Main Street<br> Houston, TX 77002<br> Attn: Contract Administration<br> Email:CrudeContracts.Mailbox@energytransfer.com<br>Copies of all legal notices to be sent via overnight courier to:<br> Energy Transfer Crude Marketing LLC<br> 1300 Main Street<br> Houston, TX 77002<br> Attn: Sweta Sethna, Chief Counsel<br> Email: Sweta.Sethna@energytransfer.com<br>*Nominations:*<br> Energy Transfer Crude Marketing LLC<br> 1300 Main Street<br> Houston, TX 77002 | <u>Seller:</u><br> Alpha Energy Texas Operating, LLC<br> 14143 Denver West Parkway, Suite 100<br> Golden, CO 80401<br> Attn: Joe Kelloff<br> Email: jkelloff@alpha-energy.us |

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&nbsp;&nbsp;&nbsp;&nbsp; Attn: Brenna Wilson<br> Email: TulsaAnalysts.Mailbox@energytransfer.com<br> Phone: (713) 989-4383<br>*Invoicing and Payables & Receivables:*<br> Energy Transfer Crude Marketing LLC<br> 1300 Main Street<br> Houston, TX 77002<br> Attn: Crude Oil Settlements<br> Email: CrudeSettlements.Mailbox@energytransfer.com<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. <u>Conflict with Division Order</u>s. In the event of any conflict between the provisions of this Agreement and the provisions of any applicable division order(s), the provisions of this Agreement shall control. Notwithstanding any such conflict, Seller shall protect, defend, indemnify and hold harmless Buyer as otherwise set forth in this Agreement, including but not limited to Section 5 and Section 7 herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. <u>Survival of Provisions</u>: The rights and obligations of either Party under the sections of this Agreement relating to Taxes, payment, indemnity, governing law, venue, waiver of jury trial and right of the Parties to offset any payment due to the other Party under this Agreement or other agreements shall survive termination of this Agreement. Notwithstanding the termination of this Agreement for any reason, each Party shall be liable for all of its accrued obligations hereunder up to and including the date on which the termination becomes effective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. <u>Attachments and Exhibits</u>: Any and all Exhibits and attachments to this document, including but not limited to, the Trucking Addendum and the Sunoco Partners Marketing & Terminals L.P. Crude Oil Purchase Agreement General Provisions dated May 1, 2020 (the "<u>GTCs</u>"), are part of this Agreement and are incorporated herein to the extent applicable in accordance with the following sentence. In case of conflict between the terms of this document and any Exhibit or attachment, the terms of this document shall control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. <u>Additional Rights.</u> The Parties agree that the execution of this Agreement, and the performance and enjoyment of the obligations and rights contemplated herein, is without prejudice to any additional rights or obligations the Parties may have to each other under separate and distinct agreements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17. The closing salutation in this electronic Agreement documentation constitutes Buyer's signature. No modification of this Agreement shall be effected by any offer, proposal, quotation, acknowledgment, shipping instruction, purchase order, or any other document containing terms or conditions different from or in addition to those in this Agreement, all such different or additional terms being hereby objected to in advance and rejected. Buyer's acceptance of Seller's Dedicated Crude Oil shall not be deemed an acceptance of Seller's contract, if one is sent to Buyer and Buyer's contract shall govern except to the extent of any error.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18. <u>Counterparts</u>. This Agreement may be executed by electronic means (including by pdf) and in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall be deemed to constitute one and the same instrument, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. If the above does not accurately represent the terms agreed to between the Parties, and Seller's written objection ("<u>Seller</u><u>'</u><u>s Objection</u>") with corrected terms is not received by Buyer within 5 days of Seller's receipt of this Agreement, or prior to delivery of Crude Oil to Buyer at the Delivery Point(s), whichever is earlier, all terms of this Agreement shall be deemed binding on both Parties. Any terms contained in a valid Seller's Objection that are different than those stated herein shall be deemed merely as proposals by Seller, and shall not be binding on Buyer unless specifically agreed to in writing by Buyer, except to the extent an error is corrected in Seller's Objection.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19. **GOVERNING LAW, VENUE AND WAIVER OF JURY TRIAL. THIS AGREEMENT SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO RULES CONCERNING CONFLICTS OF LAW. EACH PARTY HERETO AGREES THAT ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATED IN ANY WAY TO THIS AGREEMENT SHALL BE BROUGHT SOLELY IN ANY STATE OR FEDERAL COURT SITTING IN DALLAS COUNTY, TEXAS. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO THE JURISDICTION OF ANY SUCH COURT AND HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING IN ANY SUCH COURT, ANY OBJECTION TO VENUE WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING AND ANY RIGHT OF JURISDICTION ON ACCOUNT OF THE PLACE OF RESIDENCE OR DOMICILE OF EITHER PARTY HERETO. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL.**

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first set forth above.

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;**Energy Transfer Crude Marketing LLC** | **Alpha Energy Texas Operating, LLC** |
|  | **by Alpha Energy, Inc, Manager** |
| &nbsp;&nbsp;&nbsp;By: ![b01.jpg](b01.jpg) | By: ![b02.jpg](b02.jpg) |
| &nbsp;&nbsp;&nbsp;Name: Brenna Wilson | Name: Jay Leaver |
| &nbsp;&nbsp;&nbsp;Title: Sr Acct Manager - Commercial | Title: President |

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**TRUCKING ADDENDUM**

<u>Rejected Load Fee</u>. Buyer has the right to assess a fee in the amount of $150.00 per rejected load. This rejected load fee may be deducted from any payment due from Buyer under this Agreement.

<u>Minimum Load</u>. Seller agrees that no load will be called in to be hauled if the volume of merchantable Crude Oil in the tank is less than 170 barrels; *provided that*, for the following states or countries, "170" in this sentence shall instead be the number set forth opposite such state or country in the table below; and provided further that during the times Frost Laws are in place, "170" in this sentence shall instead be the minimum requirement prescribed by such Frost Laws for the applicable location.

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| | |
|:---|:---|
| **State or Country** | **Minimum requirement** |
| CANADA | 210 |
| COLORADO | 200 |
| MONTANA | 210 |
| NORTH DAKOTA | 210 |
| UTAH | 250 |
| MICHIGAN | 270 |
| WYOMING | 200 |

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<u>Meter Policy</u>. Seller agrees to notify Buyer promptly in the event that any meter on the Properties is not functioning or malfunctioning, and to again notify Buyer promptly when such meter begins to work properly. Buyer shall be notified in time to witness any repairs to such meter, as well as any measurement.

<u>Tank Strapping</u>. Seller agrees that the standard tank tables will be used for measurement until such time as (a) Seller provides tank strappings from a certified tank strapping company or (b) if Seller desires Buyer to strap tanks, Seller notifies Buyer of such desire and Buyer straps the tanks. No prior period adjustment will be made for the difference between the standard tank tables and a strapped tank.

Seller agrees to notify Buyer promptly if tanks are relocated, a tank is added, or one or more tanks are taken out of service.

Effective August 1, 2020

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**SUNOCO PARTNERS MARKETING & TERMINALS L.P.** 

**CRUDE OIL PURCHASE AGREEMENT GENERAL PROVISIONS**

**(May 1, 2020)**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Quality and Measurement</u>. Seller warrants that all Crude Oil sold and delivered hereunder shall be marketable and acceptable in the applicable common or segregated stream of the carriers involved but not to exceed 1% S&W. Seller further warrants that the Crude Oil delivered shall not be Contaminated Crude Oil, which shall be defined as Crude Oil contaminated by chemicals and/or substances foreign to virgin Crude Oil including, but not limited to chlorinated and/or oxygenated hydrocarbons and lead. Detection of Contaminated Crude Oil, in Buyer's sole discretion, shall nullify the Crude Oil Purchase Agreement and Buyer shall be under no obligation to pay for the Contaminated Crude Oil. Quantities of Crude Oil sold and delivered hereunder shall be determined by a method of measurement generally accepted within the industry including, but not limited to, the use of automatic measuring equipment, tank gauges on 100% tank table basis, and certified truck gauges and meters. Meters shall be proven in accordance with the latest American Petroleum Institute (" <u>API</u> ") standards. Volume shall be measured in barrels of forty-two (42) U.S. Gallons as adjusted for temperature to 60 degrees Fahrenheit, less deduction for basic sediment and water and other impurities determined according to applicable API practices. Crude Oil containing basic sediment and water in excess of the quantity permitted by the applicable carrier's tariff shall be treated by Seller to render it merchantable. Tests for quality shall be made at regular intervals by Buyer or Buyer's representatives in accordance with recognized procedures. Each Party shall have the right to have a representative present to witness all tests and measurements, but in the absence of either Party's representative, the results of the tests and measurements performed by Buyer shall be deemed to be conclusive.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Default</u>. If either Party commits any material breach of the terms of the Agreement, including, but not limited to, Seller failing to sell and deliver (or make any deficiency payment, indemnity payment, or payment for damages) or Buyer failing to take delivery of or pay the purchase price for all of the Crude Oil required to be sold and delivered by the terms of the Agreement, and fails to cure such breach within thirty (30) days following receipt of notice from the other Party, such event shall constitute a default under the Agreement and shall entitle the non-breaching Party to cancel or suspend deliveries, receipts and/or payments, as applicable, or terminate the Agreement and offset any payments due the non-breaching Party under the Agreement or other agreements between the two Parties, in any case without prejudice to any claim for damages or any other right or remedy under the Agreement or applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Damages</u>. The Parties agree that in the event of any material breach or repudiation of the Agreement, the non-breaching or non-repudiating Party shall be entitled to recover contract damages, lost profits, transportation, administrative or other costs for any cover or efforts to cover or resale, costs for related hedges, and any out-of-pocket costs and expenses, including, but not limited to, brokerage fees, commissions and other transactional costs, as well as court costs and reasonable legal fees (including attorneys' fees), in each case to the extent incurred by the non-breaching or non-repudiating Party during the occurrence and continuation of a breach, in connection with enforcing or preserving its rights under the Agreement, in recovering such damages, costs or expenses, and/or in terminating and liquidating transactions between the Parties and any related hedges or other transactions. To the extent the non-breaching or non-repudiating Party makes efforts to cover, such cover volumes may be purchased or sold by such Party, as applicable, pursuant to multiple transactions. Notwithstanding the foregoing, the non-breaching or non-repudiating Party shall not be required to cover for the breaching or repudiating Party's failure to perform; such Party's failure to cover or attempt to cover shall not be deemed a waiver or otherwise impose any limitation upon that Party's right to recover damages as set forth in this Section 3 (Damages). **FOR PURPOSES OF SECTION 8 (LIMITATION OF LIABILITY), ALL SUCH DAMAGES, COSTS, AND EXPENSES SHALL BE DEEMED DIRECT DAMAGES AND THE PARTIES AGREE THAT IN NO EVENT SHALL THE WAIVER IN SECTION 8 (LIMITATION OF LIABILITY) BE APPLIED TO LIMIT RECOVERY OF DAMAGES, COSTS, OR EXPENSES SET FORTH IN THIS SECTION 3 (DAMAGES).** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Force Majeure</u>. There shall be no breach or violation of the Agreement if either Party is prevented from fulfilling its obligations hereunder (other than the obligation to make payment when due, including any deficiency payment) because of an event beyond the reasonable control of a Party, including, but not limited to the following to the extent beyond the reasonable control of the Party so affected: an act of God; war; terrorism; strikes or other labor disturbances (regardless of the reasonableness of the demands of labor); riots; civil commotions; fires; floods; accidents; explosions; natural calamities; epidemics; sabotage; breakdowns, shortage of or inability to obtain energy, equipment or transportation, storage, manufacturing, refining or distribution facilities; or good faith compliance, whether mandatory or voluntary, with any regulation, direction or request, whether valid or invalid, made by any governmental authority or person purporting to act thereof (each, a " <u>Force Majeure Event</u> "); *provided that,* increased cost of performance by any Party or other economic difficulty on behalf of a Party shall not be considered a Force Majeure Event. Notwithstanding the foregoing, the following shall not, under any circumstance, constitute an event of Force Majeure:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) insufficiency of Seller's supplies of Crude Oil;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) lack of funds or other financial circumstance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) availability of more attractive markets for Crude Oil;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) absence of a market or other need for Crude Oil;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) lack of a need for Crude Oil to be provided under the Agreement; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) availability of alternative Crude Oil transportation systems or services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Condition of Property</u>. Seller agrees to maintain or cause to maintain the tanks and appurtenances related thereto, such as ladders, handrails, and catwalks, other equipment used in the Crude Oil measuring and delivery areas and locations (the " <u>Delivery Areas</u> "), the ingress and egress roads and other improvements to the Delivery Areas, and the Delivery Areas themselves in a safe and workmanlike condition with all required permits and authorizations such that Buyer, its employees, agents, and contractors may access the Delivery Areas to perform the duties and obligations set forth in the Agreement without injury or liability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.  **<u>GOVERNING LAW, VENUE AND WAIVER OF JURY TRIAL</u>. THE AGREEMENT SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO RULES CONCERNING CONFLICTS OF LAW. EACH PARTY AGREES THAT ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATED IN ANY WAY TO THE AGREEMENT SHALL BE BROUGHT SOLELY IN ANY STATE OR FEDERAL COURT SITTING IN HOUSTON, HARRIS COUNTY, TEXAS. EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO THE JURISDICTION OF ANY SUCH COURT AND HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING IN ANY SUCH COURT, ANY OBJECTION TO VENUE WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING AND ANY RIGHT OF JURISDICTION ON ACCOUNT OF THE PLACE OF RESIDENCE OR DOMICILE OF EITHER PARTY HERETO. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Compliance with Laws</u>. Each Party agrees that the performance of this Agreement shall comply with all applicable state, federal and local laws. Each Party shall supply evidence of compliance, if required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.  **<u>LIMITATION OF LIABILITY</u>. EXCEPT WITH RESPECT TO CLAIMS FOR DAMAGES, COSTS OR EXPENSES SET FORTH IN SECTION 3 (DAMAGES), THIRD PARTY CLAIMS, OR CLAIMS RELATED TO CONTAMINATED CRUDE OIL (AS DEFINED IN THE AGREEMENT), THE PARTIES** ' **LIABILITY FOR DAMAGES IS LIMITED TO DIRECT, ACTUAL DAMAGES ONLY, AND NEITHER PARTY SHALL BE LIABLE FOR SPECIAL, CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES, IN TORT, CONTRACT OR OTHERWISE, OF ANY KIND, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE PERFORMANCE, THE SUSPENSION OF PERFORMANCE, THE FAILURE TO PERFORM OR THE TERMINATION OF THE AGREEMENT. FOR THE AVOIDANCE OF DOUBT, DEFICIENCY PAYMENTS (AS DEFINED IN THE AGREEMENT) AND CLAIMS FOR LOST PROFITS SHALL BE DEEMED DIRECT DAMAGES AND NOT EXCLUDED BY THIS SECTION. EACH PARTY ACKNOWLEDGES THE DUTY TO MITIGATE DAMAGES HEREUNDER.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Waiver</u>. Failure by either Party to object to any failure of performance by the other Party of any provision of the Agreement shall not constitute a waiver of, or estoppel against, the right of such Party to require such performance by the other. Nor shall any such failure to object constitute a waiver or estoppel with respect to any succeeding failure of performance.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. <u>Assignment:</u> Neither Party may assign the Agreement without the prior written consent of the other Party, which may not be unreasonably withheld, delayed or conditioned, provided however, Buyer may without consent assign its rights and interests in the Agreement to an Affiliate or to any entity or person that acquires all or materially all of Buyer's assets or business related to crude oil purchases under the Agreement, or to any person or entity into or with which it is merged or consolidated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. <u>No Partnership</u>. Nothing contained in the Agreement shall be construed to create an association, trust, partnership, or joint venture or impose a trust, fiduciary or partnership duty, obligation or liability on or with regard to the Parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. <u>Integration and Amendments.</u> The Agreement embodies the entire understanding of the Parties hereto and supersedes all prior negotiations, understandings and Agreements between them with respect to the subject matter hereof. The provisions hereof may be waived, supplemented or amended only by an instrument in writing signed by a duly authorized representative of each of the Parties hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. <u>Severability</u>. If any portion of the Agreement should be adjudged illegal or unenforceable, the remainder of the Agreement shall continue to be enforceable and shall not be impacted by the removal of the invalid portion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. <u>No Third Party Beneficiaries</u>. There is no third party beneficiary to this Contract. Each party to this Contract represents and warrants that it has full and complete authority to enter into and to perform this Contract. Each person who executes this Contract on behalf of either party represents and warrants that it has full and complete authority to do so and that such party will be bound thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. <u>Interpretation</u>. The headings contained in the Agreement are used solely for convenience and do not constitute a part of the Agreement between the Parties and shall not be used to construe or interpret the provisions of the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. <u>Confidentiality</u>. The identity of the Parties and the terms and conditions of the Agreement including any and all drafts, shall be kept confidential and neither Party shall disclose them to any third party except (i) as may be required by court order or applicable laws and regulations or other legal process, and/or (ii) to such Party's or its Affiliates' employees, auditors, consultants, banks, financial advisors and legal advisors that have a need to know such information. In the case of required disclosure covered by subclause (i), and if the receiving Party's counsel advises that it is permissible to do so, the receiving Party shall promptly notify the other Party in writing of the request or demand received, and request further confidential treatment of the information it discloses. The Parties may exercise all remedies available at law or in equity to enforce or seek relief in connection with the confidentiality obligations contained herein. The confidentiality obligations of the Agreement shall expire one (1) year after the termination of the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17. <u>Drafting</u>. Each and every provision of the Agreement was drafted jointly by Buyer and Seller. In the event of any ambiguity in, or controversy with respect to, the meaning of any provision in the Agreement, no presumption or inference is to be drawn against either Party's interpretation or construction of the Agreement by reason of such Party's or its counsel's participation in the drafting of the Agreement.

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ALPHA ENERGY TEXAS OPERATING, LLC

COMMENCEMENT DATE: MAY 1, 2022

CONTRACT NUMBER: ALPHC22TP0001

**Price Formula**

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| | |
|:---|:---|
| PF1 | The value shall be the posted price for Sunoco OK SW averaged for the front month during the calendar month of delivery, including weekends and holidays, plus the daily diff wtd avg quoted price for Argus WTI P-Plus averaged for the trade month of the contracted delivery month, excluding weekends and holidays. |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp; **Operator** | &nbsp;&nbsp;&nbsp; **Property**<br> **Number** | &nbsp;&nbsp;&nbsp;&nbsp; **Property Name** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **County** | **State** | &nbsp;&nbsp;&nbsp;&nbsp; **Price Formula** | &nbsp;&nbsp;&nbsp;&nbsp; **Net Adjustment**<br> **per Barrel (USD)** |
| &nbsp;&nbsp; ALPHA ENERGY TEXAS OPERATING, LLC | &nbsp;&nbsp;&nbsp; 064049 | &nbsp;&nbsp;&nbsp;&nbsp; LOGAN COUNTY 11-32 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LOGAN | OK<br> &nbsp;&nbsp; E | &nbsp;&nbsp;&nbsp;&nbsp; PF1 | &nbsp;&nbsp;&nbsp;&nbsp; -1.90 |
| &nbsp;&nbsp; ALPHA ENERGY TEXAS OPERATING, LLC | &nbsp;&nbsp;&nbsp; 058751 | &nbsp;&nbsp;&nbsp;&nbsp; LOGAN COUNTY 22-11 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LOGAN | OK<br> &nbsp;&nbsp; E | &nbsp;&nbsp;&nbsp;&nbsp; PF1 | &nbsp;&nbsp;&nbsp;&nbsp; -1.90 |
| &nbsp;&nbsp; ALPHA ENERGY TEXAS OPERATING, LLC | &nbsp;&nbsp;&nbsp; 045909 | &nbsp;&nbsp;&nbsp;&nbsp; LOGAN COUNTY 2-3 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LOGAN | OK<br> &nbsp;&nbsp; E | &nbsp;&nbsp;&nbsp;&nbsp; PF1 | &nbsp;&nbsp;&nbsp;&nbsp; -1.90 |
| &nbsp;&nbsp; ALPHA ENERGY TEXAS OPERATING, LLC | &nbsp;&nbsp;&nbsp; 046683 | &nbsp;&nbsp;&nbsp;&nbsp; LOGAN COUNTY 2-9 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LOGAN | OK<br> &nbsp;&nbsp; E | &nbsp;&nbsp;&nbsp;&nbsp; PF1 | &nbsp;&nbsp;&nbsp;&nbsp; -1.90 |
| &nbsp;&nbsp; ALPHA ENERGY TEXAS OPERATING, LLC | &nbsp;&nbsp;&nbsp; 073368 | &nbsp;&nbsp;&nbsp;&nbsp; LOGAN COUNTY 30 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LOGAN | OK<br> &nbsp;&nbsp; E | &nbsp;&nbsp;&nbsp;&nbsp; PF1 | &nbsp;&nbsp;&nbsp;&nbsp; -1.90 |
| &nbsp;&nbsp; ALPHA ENERGY TEXAS OPERATING, LLC | &nbsp;&nbsp;&nbsp; 074904 | &nbsp;&nbsp;&nbsp;&nbsp; LOGAN COUNTY 1- 31 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LOGAN | OK<br> &nbsp;&nbsp; E | &nbsp;&nbsp;&nbsp;&nbsp; PF1 | &nbsp;&nbsp;&nbsp;&nbsp; -1.90 |
| &nbsp;&nbsp; ALPHA ENERGY TEXAS OPERATING, LLC | &nbsp;&nbsp;&nbsp; 172192 | &nbsp;&nbsp;&nbsp;&nbsp; LOGAN COUNTY 1-1 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LOGAN | OK<br> &nbsp;&nbsp; E | &nbsp;&nbsp;&nbsp;&nbsp; PF1 | &nbsp;&nbsp;&nbsp;&nbsp; -1.90 |
| &nbsp;&nbsp; ALPHA ENERGY TEXAS OPERATING, LLC | &nbsp;&nbsp;&nbsp; 044497 | &nbsp;&nbsp;&nbsp;&nbsp; LOGAN COUNTY 11-1 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LOGAN | OK<br> &nbsp;&nbsp; E | &nbsp;&nbsp;&nbsp;&nbsp; PF1 | &nbsp;&nbsp;&nbsp;&nbsp; -1.90 |
| &nbsp;&nbsp; ALPHA ENERGY TEXAS OPERATING, LLC | &nbsp;&nbsp;&nbsp; 054560 | &nbsp;&nbsp;&nbsp;&nbsp; LOGAN COUNTY 11-12 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LOGAN | OK<br> &nbsp;&nbsp; E | &nbsp;&nbsp;&nbsp;&nbsp; PF1 | &nbsp;&nbsp;&nbsp;&nbsp; -1.90 |
| &nbsp;&nbsp; ALPHA ENERGY TEXAS OPERATING, LLC | &nbsp;&nbsp;&nbsp; 050198 | &nbsp;&nbsp;&nbsp;&nbsp; LOGAN COUNTY 11-18 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LOGAN | OK<br> &nbsp;&nbsp; E | &nbsp;&nbsp;&nbsp;&nbsp; PF1 | &nbsp;&nbsp;&nbsp;&nbsp; -1.90 |
| &nbsp;&nbsp; ALPHA ENERGY TEXAS OPERATING, LLC | &nbsp;&nbsp;&nbsp; 055254 | &nbsp;&nbsp;&nbsp;&nbsp; LOGAN COUNTY 11-23 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LOGAN | OK<br> &nbsp;&nbsp; E | &nbsp;&nbsp;&nbsp;&nbsp; PF1 | &nbsp;&nbsp;&nbsp;&nbsp; -1.90 |
| &nbsp;&nbsp; ALPHA ENERGY TEXAS OPERATING, LLC | &nbsp;&nbsp;&nbsp; 062147 | &nbsp;&nbsp;&nbsp;&nbsp; LOGAN COUNTY 11-25 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LOGAN | OK<br> &nbsp;&nbsp; E | &nbsp;&nbsp;&nbsp;&nbsp; PF1 | &nbsp;&nbsp;&nbsp;&nbsp; -1.90 |
| &nbsp;&nbsp; ALPHA ENERGY TEXAS OPERATING, LLC | &nbsp;&nbsp;&nbsp; 059383 | &nbsp;&nbsp;&nbsp;&nbsp; LOGAN COUNTY 11-26 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LOGAN | OK<br> &nbsp;&nbsp; E | &nbsp;&nbsp;&nbsp;&nbsp; PF1 | &nbsp;&nbsp;&nbsp;&nbsp; -1.90 |
| &nbsp;&nbsp; ALPHA ENERGY TEXAS OPERATING, LLC | &nbsp;&nbsp;&nbsp; 053181 | &nbsp;&nbsp;&nbsp;&nbsp; LOGAN COUNTY 2- 24 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LOGAN | OK<br> &nbsp;&nbsp; E | &nbsp;&nbsp;&nbsp;&nbsp; PF1 | &nbsp;&nbsp;&nbsp;&nbsp; -1.90 |
| &nbsp;&nbsp; ALPHA ENERGY TEXAS OPERATING, LLC | &nbsp;&nbsp;&nbsp; 044961 | &nbsp;&nbsp;&nbsp;&nbsp; LOGAN COUNTY 2-2 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LOGAN | OK<br> &nbsp;&nbsp; E | &nbsp;&nbsp;&nbsp;&nbsp; PF1 | &nbsp;&nbsp;&nbsp;&nbsp; -1.90 |
| &nbsp;&nbsp; ALPHA ENERGY TEXAS OPERATING, LLC | &nbsp;&nbsp;&nbsp; 053563 | &nbsp;&nbsp;&nbsp;&nbsp; LOGAN COUNTY 2-20 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; LOGAN | OK<br> &nbsp;&nbsp; E | &nbsp;&nbsp;&nbsp;&nbsp; PF1 | &nbsp;&nbsp;&nbsp;&nbsp; -1.90 |

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Page 11 of 12

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---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| ALPHA ENERGY TEXAS OPERATING, LLC | 059384 | LOGAN COUNTY 2-28 | LOGAN | OK<br>E | PF1 | -1.90 |
| ALPHA ENERGY TEXAS OPERATING, LLC | 046050 | LOGAN COUNTY 2-4 | LOGAN | OK<br> E | PF1 | -1.90 |
| ALPHA ENERGY TEXAS OPERATING, LLC | 172191 | LOGAN COUNTY 29-1 | LOGAN | OK<br> E | PF1 | -1.90 |
| ALPHA ENERGY TEXAS OPERATING, LLC | 054921 | LOGAN COUNTY11-16 | LOGAN | OK<br> E | PF1 | -1.90 |

---

Page 12 of 12

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![docu01.jpg](docu01.jpg)

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![docu02.jpg](docu02.jpg)

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Electronic Record and Signature Disclosure created on: 5/4/2022 7:46:22 AM

Parties agreed to: BRENNA WILSON, Jay Leaver, Joe Kelloff

**CONSENT TO RECEIPT OF ELECTRONIC RECORD**

In this consent:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· "We," "us," "our" and "company" may mean individually or collectively Energy Transfer LP, Sunoco LP and its successors and assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· "I," "You" and "your" means the person giving this consent.

**Obtaining Paper Copies**

At any time, you may request a paper copy of any record provided or made available electronically to you. Requests for paper copies should be made in writing to the appropriate designated person of the company.

**Withdrawing Consent**

If you consent to receive records electronically, you may at any time withdraw your consent. To withdraw your consent, notify the appropriate designated person of the company in writing.

**Extent of Consent**

Your consent covers all records provided to you electronically.

**Current Electronic Address**

You must notify the appropriate designated person of the company in writing of any change in your email or other electronic mail address.

**Minimum Hardware and Software Requirements**

The following are minimum hardware and software requirements for accessing the electronic record:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Operating Systems: Windows2000, WindowsXP, or above · Browsers for Senders: Internet Explorer 6.0 or above · Browsers for Signers: Internet Explorer 6.0, Mozilla FireFox 1.0, NetScape 7.2 or above · Email: Access to a valid email account · Screen Resolution: 800 x 600 minimum · Enabled Security Settings: Allow per session cookies; Users accessing the internet behind a Proxy Server must enable HTTP 1.1 settings via proxy connection

If you are an external user, by providing your consent you are also confirming that you have the hardware and software described above, that you are able to receive and review electronic records, and that you have an active email account.

**Acknowledgement**

By checking the 'I Accept' box, I confirm that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· I have access to and have read this Electronic CONSENT TO RECEIPT OF ELECTRONIC RECORD document; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· I can print the consent or save or send the consent to a place where I can print it, for future reference and access, if desired.

## Exhibit 10.22

**Exhibit 10.22**

**<u>ASSIGNMENT OF LLC MEMBERSHIP INTEREST</u>**

**THIS ASSIGNMENT OF LLC MEMBERSHIP INTEREST** is made and entered into effective as of February 23, 2018, by and between John Lepin ("Assignor") and Alpha Energy, Inc., a Colorado corporation ("Assignee").

**<u>RECITALS</u>**

**WHEREAS,** Assignor is the owner and holder of 100% of the limited liability membership interests of Alpha Energy Texas Operating, LLC, a Texas limited liability company (the "Membership Interest"); and

**WHEREAS,** Assignor wishes to convey 100% of the Membership Interest to Assignee.

**NOW THEREFORE,** for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Recitals</u>. The recitals contained hereinabove are acknowledged by the parties as being true and correct and are incorporated by reference herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Assignment</u>. Assignor hereby assigns, sells, conveys, transfers and sets over unto Assignee, its successors and assigns, all right, title and interest of Assignor in and to the Membership Interests, free and clear of all liens, claims, charges and encumbrances. Assignor hereby represents and warrants to Assignee that (i) Assignor is the sole legal and beneficial owner of the Membership Interest, (ii) Assignor owns the Membership Interest free and clear of all liens, claims, charges and encumbrances, and (iii) Assignor has the full power and authority to assign, sell, convey, transfer and set over to Assignee all of Assignor's right, title and interest in and to the Membership Interest, and no approval or consent of any person, court or other governmental authority or agency is required in connection with this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Consideration</u>. Assignee shall not pay Assignor any consideration for the assignment of the Membership Interest other than $1.00USD in hand received.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>General Provisions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Entire Agreement</u>. This Agreement contains the entire agreement of the parties hereto with respect to the subject matter hereof and the transactions contemplated herein, and supersedes all prior understandings and agreements (oral and written) of the parties with respect to the subject matter hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Severability</u>. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the greatest extent possible.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Governing Law; Venue</u>. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed in that State. Venue of any action arising out of this Agreement shall lie exclusively in New York, New York.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Further Actions</u>. Assignor agrees to execute such addition documents, stock powers and letters of direction as may be necessary to effect the assignment contemplated hereby.

**{Signature Page to Follow}** 

------

**IN WITNESS WHEREOF**, Assignor and Assignee have caused this Assignment to be duly executed as of the date first above written.

---

| | |
|:---|:---|
| **ASSIGNOR:** | **ASSIGNEE:** |
| John Lepin | Alpha Energy, Inc. |
|  | By: |
|  | Name: |
|  | Title: |

---

## Exhibit 21.1

Exhibit 21.1

List of Subsidiaries

<u>Name</u> <u>Jurisdiction</u> <br>Alpha Energy Texas Operating Agreement, LLC Texas

## Exhibit 23.1

**Exhibit 23.1**

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We hereby consent to the incorporation in this Registration Statement on Form S-1 relating to the reviewed financial statements of Alpha Energy, Inc for the period ended September 30, 2022 and to all references to our firm included in this Registration Statement.

![sig01.jpg](sig01.jpg)

Certified Public Accountants

Lakewood, CO

February 13, 2023

## Exhibit 23.2

**Exhibit 23.2**

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We consent to the inclusion in this Registration Statement on Form S-1 of our report dated March 31, 2022 with respect to the audited consolidated financial statements of Alpha Energy, Inc. for the years ended December 31, 2021 and 2020. Our report contains an explanatory paragraph regarding the Company's ability to continue as a going concern.

We also consent to the references to us under the heading "Experts" in such Registration Statement.

*/s/ MaloneBailey, LLP*

www.malonebailey.com

Houston, Texas

February 14, 2023

## Exhibit 99.1

**Exhibit 99.1**

![logo.jpg](logo.jpg)

**Alpha Energy, Inc.**

**CODE OF ETHICS** 

**AND**

**BUSINESS CONDUCT**

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***Message from the CEO Regarding Our Ethical Standards***

September<u> </u>, 2017

Dear Employee or Director:

It is the Company's policy that its affairs be conducted with the highest standards of integrity and business ethics. To that end, the Company maintains a Code of Ethics and Business Conduct. Attached is a copy of our Code of Ethics and Business Conduct, which I ask you to read very carefully. The successful business operation and reputation of Alpha Energy is built upon the principles of fair dealing and ethical conduct. Our reputation for integrity and excellence requires careful observance of the spirit and letter of all applicable laws and regulations, as well as a scrupulous regard for the highest standards of conduct and personal integrity.

Alpha Energy will comply with all applicable laws and regulations and expects its employees and directors to conduct business in accordance with the letter, spirit and intent of all relevant laws and to refrain from any illegal, dishonest or unethical conduct. In general, the use of good judgment, based on high ethical principles, will guide you with respect to acceptable conduct. You should also refer to our Code of Ethics and Business Conduct. If a situation arises where it is difficult to determine the proper course of action, the matter should be discussed openly with your immediate supervisor. Compliance with the Code of Ethics and Business Conduct is the responsibility of every Alpha Energy employee and director. Disregarding or failing to comply with our Code of Ethics and Business Conduct could lead to disciplinary action, up to and including possible termination of employment or service, and/or possible legal action against you.

Sincerely,

![smlpglogo.jpg](smlpglogo.jpg)-i

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**Alpha Energy, Inc.**

**CODE OF ETHICS AND BUSINESS CONDUCT**

**<u>**TABLE OF CONTENTS**</u>**

**[REVISE]**

![smlpglogo.jpg](smlpglogo.jpg)-ii

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**<u>ALPHA ENERGY, INC</u>** 

**<u>BUSINESS CONDUCT GUIDELINES</u>**

**<u>INTRODUCTION</u>**

*The Alpha Energy Code of Ethics and Business Conduct*

Alpha Energy provides you with *The Alpha Energy Code of Ethics and Business Conduct* (the "Alpha Energy Code" or the "Code") for guidance in addressing the legal and ethical issues encountered while conducting Alpha Energy's business. We use "Alpha Energy" or the "Company" throughout to refer to Alpha Energy, Inc. and each of its subsidiaries.

Employment by Alpha Energy is subject to the terms and conditions established by Alpha Energy. As part of those terms and conditions, you are also required to abide by the Company-wide standards set forth in this Code. This Code is not a contract, and no contract is implied. If any part of this Code conflicts with applicable law, the law will prevail. If any part of this Code is deemed invalid, the validity and enforceability of its other provisions shall not be affected. Alpha Energy may interpret the Code at its sole discretion.

Alpha Energy recognizes and respects regional and local legal differences in employment, privacy, and other applicable laws. We will comply with regional and local requirements concerning the matters discussed in this Code, as appropriate, including those concerning use of the Compliance and Ethics Helpline/reporting of misconduct, employee monitoring, application of certain rules to temporary employees, and application of certain penalties.

**Understanding this Code**

The Alpha Energy sets forth Alpha Energy's standards of ethics and business conduct. It has been prepared to aid you as you go about your daily work. These standards supplement and may go well beyond compliance with laws and regulations.

Although we operate in several states and are subject to many different rules, regulations, customs, and practices, we can only succeed if we adhere to a common set of values and standards. It is essential that we each make a personal commitment and recognize that we are responsible and accountable for understanding and meeting the standards described in this Code because Alpha Energy's success and reputation depend upon the performance of each of us.

The Code was not drafted, and will not be applied, in a vacuum. Questions and issues will arise which are not addressed by the Code. Additionally, many of the areas covered by the Code are quite complex and may require further explanation. Accordingly, the Board has authorized Kruse Landa Maycock & Rick, LLC its Compliance Consultant, to oversee continuing education on a variety of topics, some of which are covered by the Code. These programs will assist us all in maintaining high standards of ethical conduct. In addition to other persons and departments identified in this Code, [Kruse Landa Maycock & Ricks is available to answer questions by telephone and can be reached at 801-531-7090].

![smlpglogo.jpg](smlpglogo.jpg)-1

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In reviewing the Code, you may note that various references are made to corporate policies and procedures of the Company where more details regarding the subjects covered in the Code may be found. You are expected to review the complete policy or procedure where a full understanding of the particular subject is necessary for the proper handling of their responsibilities. Complete copies of the policies covered in this Code may be obtained from [Kruse Landa Maycock & Ricks].

The Alpha Energy Code starts with a summary of the core business values that are essential to Alpha Energy's success. They are the foundation of all that we do, and we each are expected to adopt these values in our day-to-day business activities. Widespread adherence to these values will enhance our long-term success by improving our ability to serve customers, increasing our competitiveness, and promoting our pride in being part of the Alpha Energy team.

The Alpha Energy Code then describes how we should interact with each other, with other companies and individuals, and with the states and governments that make up the world in which we operate. Specifically, it addresses four areas:

● **Compliance:** 

Our responsibility to abide by the laws, regulations, and Alpha Energy policies that apply to our business wherever we operate.

● **Business Conduct:** 

Our obligation to conduct internal and external business fairly and ethically.

● **Alpha Energy** ' **s Relationships:** 

Our responsibility to interact fairly and respectfully with each other, our customers, our partners, and our suppliers.

● **Enforcement:** 

Our commitment to conduct investigations in an ethical and legal manner, and to promote consistent disciplinary action for violations of our policies or business conduct standards.

*Applicability of This Code*

**Employees**

The Alpha Energy Code applies to all personnel employed by or engaged to provide services to Alpha Energy, including, but not limited to, Alpha Energy's employees, officers, temporary employees, workers (including agency workers), casual staff, and independent contractors (for ease of reference throughout this Code, "employees").

![smlpglogo.jpg](smlpglogo.jpg)-2

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**Alpha Energy Senior Officers and Non-Employee Members of the Board of Directors**

Alpha Energy's senior officers (Chief Executive Officer, President(s), Chief Operating Officer, Chief Financial Officer, Chief Accounting Officer, General Counsel, each Executive Vice President, and each Senior Vice President) are subject to both this Code and Alpha Energy's Supplemental Conflict of Interest Policy for Senior Officers, which among other things contains certain supplemental procedural measures designed to identify and address potential conflicts of interest involving senior officers. Non-employee directors are also subject to this Code in their capacity as members of the Alpha Energy Board of Directors (the "Board"), except that they are subject to the conflict of interest provisions of Alpha Energy's Corporate Governance Guidelines in lieu of the conflict of interest provisions contained in this Code. The Supplemental Conflict of Interest Policy for Senior Officers and the Corporate Governance Guidelines are posted on the Corporate Governance section of Alpha Energy's Investor Relations Web site. Senior officers and members of the Board who have questions regarding this Code or other relevant policies should contact Alpha Energy's Legal Department.

Any waiver of this Code for any executive officer or senior financial officer of Alpha Energy or member of the Board must be approved by the Board. Such waivers, and the reasons for such waivers, shall be promptly disclosed to Alpha Energy's stockholders and shall be otherwise reported as required by law. A waiver of this Code for other officers or employees of the Company may be granted only by the Chief Executive Officer of the Company in writing. For purpose of this Code, a "senior financial officer" means the Company's principal financial officer, principal accounting officer, controller, and other persons performing similar functions.

*A Summary of Alpha Energy Values*

Certain core values comprise the foundation of our company. The following are essential to Alpha Energy's business:

**Integrity**

Alpha Energy employees demonstrate honesty and sound ethical behavior in all business transactions and personal integrity in all dealings with others.

**Mutual Respect**

Alpha Energy employees consistently treat individuals with respect and dignity.

**Teamwork**

Alpha Energy employees work together as a team for the collective interests of Alpha Energy.

**Communication**

Alpha Energy employees share information effectively with each other. We balance the need to share information alongside the need for confidentiality regarding certain information.

![smlpglogo.jpg](smlpglogo.jpg)-3

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**Innovation**

Alpha Energy employees seek innovative and creative approaches to problem solving.

**Customer Satisfaction**

Alpha Energy employees consistently treat customer satisfaction as a top priority.

**Quality**

Alpha Energy employees make excellence and quality a part of day-to-day work processes and seek continuous improvement in all that they do.

**Fairness**

Alpha Energy employees commit to dealing fairly with customers, suppliers, partners, and one another.

**Compliance**

Alpha Energy employees comply with all laws, regulations, and Alpha Energy policies that govern Alpha Energy's business and employees' actions on behalf of the company.

**Ethics**

Alpha Energy employees observe the standards that have been established by Alpha Energy and act ethically in their approach to business decisions.

*COMPLIANCE*

*Compliance with Laws, Regulations, and Alpha Energy Policies*

We must each operate within the bounds of all laws, regulations, and internal policies applicable to Alpha Energy's business, wherever we conduct it. Where local laws are less restrictive than this Code, you must comply with the Code, even if your conduct would otherwise be legal. On the other hand, if local laws are more restrictive than the Code, you must always, at a minimum, comply with those laws.

Alpha Energy expects its employees to:

● Act ethically and with integrity in all business dealings;

● Comply with the law, this Code, Alpha Energy policies, and Alpha Energy business practices;

● Report known or potential violations using available reporting channels;

● Cooperate with compliance investigations; and

● Complete all mandatory compliance education courses and other Compliance and Ethics Program requirements in a timely manner.

![smlpglogo.jpg](smlpglogo.jpg)-4

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Further, Alpha Energy expects its managers to:

● Promote and support ethical behavior and business practices that comply with this Code;

● Act as a leadership model for this Code;

● Ensure that employees who report to them directly or indirectly understand where and how to report violations of this Code;

● Ensure that employees who report to them directly or indirectly complete all mandatory compliance education courses and other Compliance and Ethics Program requirements in a timely manner;

● Maintain an "open door" policy with regard to employee questions, including those of business conduct and ethics, and ensure availability of compliance and ethics resources and support, such as printed materials and relevant contact information;

● Encourage employees to challenge and report questionable conduct; and

● Encourage open, honest, and confidential dialogue without retaliation.

From time to time, we may revise this Code. If and when this happens, Alpha Energy will notify you. You will then be responsible for becoming familiar with such revisions. For the most current version, always refer to the online Code. If you have questions on how to interpret or comply with this Code, Alpha Energy policies, or applicable law, contact Alpha Energy's Compliance Consultant (as hereinafter defined) or Alpha Energy's Legal Department.

*Compliance Consultant*

To assist in the interpretation and enforcement of the Code and with business and other issues, Alpha Energy has appointed Kruse Landa Maycock & Ricks (the "Compliance Consultant") as a consultant. The Compliance Consultant reports directly to the Audit Committee of the Board. The Compliance Consultant shall provide periodic reports to the Audit Committee as the circumstances require, provided that such reports shall be made no less frequently than on an annual basis. Subject to the Board's oversight and approval and the terms of the Code, the Compliance Consultant's responsibilities include development, dissemination, interpretation, implementation, maintenance (including scheduling additional training and seminars), updating and evaluation and enforcement of this Code. Responsibility for overall compliance with this Code rests with the Board.

*Where to Go for Help*

**The Alpha Energy Compliance and Ethics Program**

The Alpha Energy Compliance and Ethics Program, with the support of Alpha Energy's Executive Management, Board and Compliance Consultant, aims to ensure that all Alpha Energy employees, business partners, and suppliers adhere to high ethical business standards.

![smlpglogo.jpg](smlpglogo.jpg)-5

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With general oversight from Alpha Energy's General Counsel, the Compliance and Ethics Program is led by the Compliance Consultant. A major objective of the Compliance and Ethics Program is the enforcement of the *Alpha Energy Code of Ethics and Business Conduct* and related policies. We work closely with other lines of business and outside advisors, as appropriate.

The Alpha Energy Compliance and Ethics Program:

● Provides support to help employees comply with the *Alpha Energy Code of Ethics and Business Conduct;* 

● Seeks to prevent and detect unlawful or unethical business conduct;

● Manages the administration of mandatory compliance education training courses;

● Oversees internal compliance investigations;

● Promotes consistency in the application of disciplinary action;

● Provides quarterly updates to the Audit Committee regarding investigations and disciplinary action taken; and

● Provides the entire Board with a full briefing on the Compliance and Ethics Program at a minimum annually.

We count on each of you to set the right tone and lead by example.

**Reporting Code Violations**

Alpha Energy fully commits to maintaining high standards of ethical and professional conduct for the Company and its employees. To do so, we provide multiple resources for reporting, investigating, and resolving allegations of employee misconduct as well as for determining and enforcing related disciplinary action. Report any conduct that you reasonably believe may be a violation of this Code and other activities that could affect Alpha Energy's or its employees' compliance with legal and ethical obligations. If at any time you have even a suspicion that Alpha Energy's obligations relating to financial integrity, auditing and accounting, insider trading, anti-corruption policies, or political contributions have been compromised, you are expected to immediately report it.

Alpha Energy will not tolerate retaliation against any employee who reports a concern in good faith or cooperates with a compliance investigation even when allegations are found to be unsubstantiated.

![smlpglogo.jpg](smlpglogo.jpg)-6

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You have multiple options for reporting allegations of misconduct. Depending on the circumstances, these include:

● Your manager;

● Human resources;

● The Compliance Consultant;

● The Chief Executive Officer;

● The Audit Committee;

● The Company's General Counsel; and

● The Company's Ethics Hotline.

**The Alpha Energy Ethics Hot Line**

<u>Hotline Telephone Number:</u> [<u> </u>]

<u>When Should the Hotline Be Used?</u>

&nbsp;&nbsp;&nbsp;&nbsp;● The hotline was established to supplement, not replace, the complaint and reporting procedures described in the Code and in other Alpha Energy policies. The hotline should be used:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(1)** to report a violation or potential violation when normal communication channels are not realistic;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(2)** when normal communication channels have been exhausted, and the violation persists; or

&nbsp;&nbsp;&nbsp;&nbsp;**(3)** to report concerns regarding questionable accounting, internal accounting controls or auditing matters.

<u>What Does the Hotline Provide?</u>

&nbsp;&nbsp;&nbsp;&nbsp;● a confidential means of anonymously communicating with the Audit Committee of the Board; and

&nbsp;&nbsp;&nbsp;&nbsp;● feedback on the findings where possible.

Persons who in good faith report violations or potential violations of the Code or raise concerns regarding questionable accounting, internal accounting controls or auditing matters will not be subject to adverse personnel actions. No action will be taken or threatened against any person as a reprisal for making a complaint or disclosing information, unless the complaint was made or the information was disclosed with knowledge that it was false or with willful disregard for the truth.

The use of the hotline does not preclude the Company from disciplining a person involved in improper activity, even if he or she is the one who disclosed the matter to the Company; however, the Company may give favorable consideration to such person's voluntary act of disclosure in any ensuing decisions.

![smlpglogo.jpg](smlpglogo.jpg)-7

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*Business Practices*

**Antitrust and Competition Laws**

Various laws and regulations prohibit unlawful restraint of trade, usually referred to as antitrust or competition laws. These laws are designed to protect consumers and competitors against unfair business practices and to promote and protect healthy competition. Alpha Energy commits rigorously to observing applicable antitrust or competition laws of all countries or organizations.

*Example: You must avoid all discussions and the exchange of information with competitors involving topics such as pricing, supplier or customer relationships, or market allocation, because they are, in fact, illegal. Disassociate yourself from any such discussions immediately and report the incident to the Alpha Energy Legal Department.*

Generally, antitrust or competition laws prohibit agreements or actions that reduce competition without benefiting consumers. Among those activities generally found to violate antitrust or competition laws are agreements and understandings among competitors to:

&nbsp;&nbsp;&nbsp;&nbsp;● Fix or control prices;

&nbsp;&nbsp;&nbsp;&nbsp;● Structure or orchestrate bids to direct a contract to a certain competitor or reseller (bid rigging);

&nbsp;&nbsp;&nbsp;&nbsp;● Boycott specified suppliers or customers;

&nbsp;&nbsp;&nbsp;&nbsp;● Divide or allocate markets or customers; or

&nbsp;&nbsp;&nbsp;&nbsp;● Limit the production or sale of products or product lines for anti-competitive purposes.

Agreements of the type listed above are against public policy and are against Alpha Energy policy. Employees must never engage in discussions of such matters with representatives of other companies. You should report to the Alpha Energy Legal Department any instance in which other companies initiate such discussions.

Contracts or other arrangements that involve exclusive dealing, tie-in sales, price discrimination, and other terms of sale may be unlawful under applicable antitrust or competition laws. You should not enter into such arrangements without the approval of the Alpha Energy Legal Department.

Alpha Energy strives to ensure that its practices comply with United States antitrust laws. In addition to local laws, antitrust laws of the United States may apply to international business operations and transactions. This includes imports to and exports from the United States.

Unfair methods of competition and deceptive practices are also prohibited. Examples of these include:

&nbsp;&nbsp;&nbsp;&nbsp;● Making false or misleading representations about Alpha Energy's products or services;

&nbsp;&nbsp;&nbsp;&nbsp;● Falsely disparaging a competitor or its products or services;

![smlpglogo.jpg](smlpglogo.jpg)-8

------

&nbsp;&nbsp;&nbsp;&nbsp;● Making product claims without facts to substantiate them; and

&nbsp;&nbsp;&nbsp;&nbsp;● Using another company's trademarks in a way that confuses the customer as to the source of a product.

Because of the complexity of antitrust and competition laws, seek advice from the Alpha Energy Legal Department on any related question.

**No Improper Payments**

You are prohibited from receiving, offering, promising, authorizing, directing, or making any bribes, kickbacks, or payments of money or anything of value to improperly obtain business or any other advantage for Alpha Energy or yourself.

The above prohibition applies whether such payments go to:

● Government or public international organization employees or officials;

● Political parties or candidates for political office;

● Business entities partially or wholly owned by government interests;

● Privately-held commercial companies;

● Alpha Energy employees; or

● Any other third party.

Alpha Energy strictly prohibits giving money or anything of value directly or indirectly to a government official for the purpose of corruptly influencing a foreign government. This prohibition includes corruptly giving money or anything of value to any third party where there is reason to believe that it will be passed on to a government employee or official. Refer to the "Dealing with Government" section for more information regarding government entities.

**No Economic Boycotts**

Alpha Energy does not participate in any economic boycott not sanctioned by the United States government. Alpha Energy and its employees are prohibited from discriminating against or refusing to do business with a country that is the object of an unsanctioned boycott, nationals of the boycotted country, or "blacklisted" companies.

Additionally, Alpha Energy and its employees may not furnish information concerning Alpha Energy's, or any other person's, business relationships with a boycotted country or blacklisted company. If requested to supply any information, take any action, or refrain from taking any action to further or support a boycott of a country, immediately contact the Alpha Energy Legal Department. This policy is intended to ensure that we comply with foreign economic boycott laws of the United States. Address questions or requests for information regarding the Foreign Economic Boycott Policy or antiboycott laws to the Alpha Energy Legal Department.

![smlpglogo.jpg](smlpglogo.jpg)-9

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**Export Laws**

United States Export Control Laws govern all exports of commodities and technical data from the United States, including:

&nbsp;&nbsp;&nbsp;&nbsp;● Physical items;

&nbsp;&nbsp;&nbsp;&nbsp;● Items that are hand-carried as samples or demonstration units in luggage;

&nbsp;&nbsp;&nbsp;&nbsp;● Electronic or physical distribution of software and source code; and

&nbsp;&nbsp;&nbsp;&nbsp;● Written, electronic, or oral disclosure of technical data to a foreign visitor or H1-B Visa worker.

Failure to comply with U.S. export control laws could result in the loss or restriction of Alpha Energy's export privileges. Violation of these laws may also result in fines and imprisonment for individual employees and their management chain. You are responsible for understanding how the export control laws apply to your job and for conforming to these laws. Compliance with export control laws is essential to our ability to do business in the international marketplace.

United States and foreign governments maintain strict rules regarding the methodology for goods exchanged across their borders. Local export laws may also apply to shipments to or from the country in which you operate. False or misleading statements made on export documentation could jeopardize Alpha Energy's operations and lead to audits and fines, which would damage our ability to conduct business. All managers and employees must integrate export control procedures into their regular business processes for Alpha Energy to have success in the international marketplace.

Questions concerning export compliance matters or any violation of these laws or regulations should be directed to the Alpha Energy Legal Department.

**Immigration Laws**

You must ensure that you, and any employees who work for you, comply with all applicable immigration laws and/or the advice of Alpha Energy's designated immigration service providers. Alpha Energy employees who travel internationally on business are responsible for obtaining appropriate work authorizations before attempting to enter a host country. Visa and work permit requirements apply to all Alpha Energy employees who travel outside of their home countries for business purposes or who work on projects or international assignments outside of their home country for any duration. Moreover, Alpha Energy prohibits its employees from knowingly allowing contractors or other employees to work on a project without the proper authorization or documentation.

If you need advice on immigration issues, contact the Alpha Energy Legal Department.

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**Securities and Insider Trading**

Alpha Energy expects all its employees to comply fully with applicable insider trading and securities laws. Insider trading and securities laws provide substantial civil and criminal penalties for individuals who fail to comply. If you trade in Alpha Energy securities or the securities of any other company trading on a United States stock exchange, you are subject to United States securities laws, any other securities or insider trading laws that may apply to you locally, and Alpha Energy's insider trading policy.

Securities include:

● Common stocks;

● Bonds;

● Employee stock options;

● Futures;

● Derivatives; and

● Other financial instruments.

Alpha Energy employees who possess material, nonpublic information gained through their work at Alpha Energy may not trade in Alpha Energy securities or the securities of another company to which the information pertains. Employees may not engage in any other action to take advantage of or pass on to others (i.e., "tip") material information before its release to the public at large and for a period of time after it is publicly disclosed. These restrictions also apply to spouses and family members. Material information is any information that a reasonable investor would consider important in a decision to buy, hold, or sell securities. It includes any information that could reasonably be expected to cause a change in the price of securities of Alpha Energy or the securities of another company to which the information relates.

Material information may include financial performance or significant changes in financial performance or liquidity (including forecasts); potential or ongoing major mergers, acquisitions, joint ventures, or divestitures; award or cancellation of a major contract; changes in key manage- ment; changes in auditors, knowledge of a qualification in an auditor's opinion or report or any change in the ability to rely on prior auditor reports; actual or threatened significant litigation or investigations; and gain or loss of a substantial customer or supplier.

Information is considered to be nonpublic ***unless*** it has been disclosed effectively to the public. Examples of public disclosure include public filings with the Securities and Exchange Commission and the Company's press releases. For information to be considered public, it must not only be disclosed publicly, but adequate time must have passed for the market as a whole to assess the information. Arguably the most risky time to trade in Alpha Energy's securities is shortly in advance of Alpha Energy's public release of important financial information or other important news, while the least risky time normally is the period shortly following the release and publication of such information (unless, of course, you are aware of other material information that has not been publicized). Even after Alpha Energy has released such information, sufficient time must have elapsed to enable the information to be assessed by the market as a whole. Although timing may vary depending upon the circumstances, for purposes of this Policy, information is not considered public until the ***third trading day*** after Alpha Energy publicly discloses it. Therefore, any director, officer or employee that possesses material, nonpublic information about Alpha Energy, Inc, or another company, shall wait until the third business day after the information has been publicly released before trading or recommending that others trade in Alpha Energy's securities, or the securities of such other company, as the case may be.

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When you know material, nonpublic information about *any* company, then you, your spouse and people living in your house generally are prohibited from three activities:

● trading in that company's securities (including trading by or through that company's 401(k) or other employee benefit plans),

● having others trade for you in that company's securities, and

● disclosing the information to anyone else who then might trade.

You, anyone acting on your behalf, and anyone who learns the information directly or indirectly from you (including your spouse and members of your household) are prohibited from trading. The prohibitions continue whenever, and for as long as you know material, nonpublic information about the company.

Although it is most likely that any material, nonpublic information you might learn would be about Alpha Energy (including its subsidiaries), these prohibitions apply to trading in the securities of ***any*** company about which you have material, nonpublic information that you obtained in the course of your employment or position with Alpha Energy.

As previously discussed, the disclosure of material, nonpublic information to others can lead to significant legal difficulties, fines and punishment. You should not discuss material, nonpublic information about the Company or its subsidiaries with anyone, including other employees, except as required in the performance of your regular duties on a need-to-know basis. However, if you become aware of nonpublic information about Alpha Energy that is material or may become material, you should promptly communicate the information to your supervisor and request that the supervisor communicate the information directly to the Company's General Counsel, Chief Executive Officer and Chief Financial Officer.

It is important that only a few representatives of the Company discuss the Company and its subsidiaries with the news media, securities analysis and investors. Inquiries about Alpha Energy from these people should be referred to Alpha Energy's Manager of Investor Relations. In his/her absence, such inquiries should be referred to the Chief Financial Officer or Chief Executive Officer.

Alpha Energy has strict policies to safeguard the confidentiality of its internal, proprietary information. These include identifying, marking and safeguarding confidential information and employee confidentiality agreements. You should comply with these policies at all times.

It is Alpha Energy's policy that neither you, your spouse nor any member of your household shall engage in day trading or make any short sales of any securities of Alpha Energy. In addition, no such person may buy or sell puts, calls or options in respect of Alpha Energy's securities at any time.

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Day trading refers to the practice of rapidly buying and selling a stock throughout a day or over a period of a few days in the hope that the stock will continue climbing or falling in value, allowing a person to lock in quick profits. Day traders do not "invest" but seek to ride the momentum of the stock and get out of the stock before it changes course. Short sales are sales of securities that the seller does not own at the time of the sale or, if owned, that will not be delivered within 20 days of the sale. One usually sells short when one thinks the market is going to decline substantially or the stock will otherwise drop in value. If the stock falls in price as expected, the person selling short can then buy the stock at a lower price for delivery at the earlier sale price (this is called "covering the short") and pocket the difference in price as profit. In addition to the fact that it is illegal for directors and officers to sell their company's securities short, Alpha Energy believes it is inappropriate for its employees, consultants, officers or directors to bet against Alpha Energy's securities in either of these ways. Puts, calls and options for Alpha Energy's securities (other than employee benefit plan options) also afford the opportunity to profit from a market view that is adverse to Alpha Energy, and they carry a high risk of inadvertent securities law violations. All such transactions are prohibited.

Other policies apply specifically to officers, directors and "corporate insiders" of Alpha Energy and its subsidiaries. If you are such a person, you must inform yourself of and fully comply with the requirements under Section 16 of the Securities Act of 1934, Rule 144 under the Securities Act of 1933, and Rule 10b-5 under the Securities Act of 1934. If you are in doubt about whether you are an officer, director or "corporate insider" who is bound by these other policies, you should consult the Alpha Energy Legal Department. It is your responsibility to contact the appropriate persons within Alpha Energy and to make this determination.

Employees are encouraged to ask questions and seek any follow-up information that they may require about Alpha Energy's policy for trading in securities. Please direct all such questions to the Alpha Energy Legal Department at (801) 531-7090.

Examples:

*Q: I have become aware that we will likely exceed our quarterly revenue guidance estimates, but we have not yet made a public announcement. I stand to make a lot of money once this gets out. May I buy more shares of Alpha Energy stock?*

*A: No. What you are considering is insider trading. This is a violation of Alpha Energy policy and a violation of applicable insider trading and securities laws. You may buy or sell Alpha Energy stock only after such an announcement is made public and after a period of time has elapsed to allow the financial markets to absorb this information. Consult Alpha Energy*'*s Insider Trading Policy for more detailed guidelines.*

*Q: Through my job at Alpha Energy, I have become aware of nonpublic financial information received from one of Alpha Energy*'*s customers that indicates the customer is in better financial condition than most people realize. I wish to purchase the customer's stock. May I do so?*

*A: No. The customer may have provided this information in trust to help Alpha Energy determine how to best meet the customer*'*s needs. Using this information for personal purposes or disclosing it to others is a violation of that trust, a violation of Alpha Energy policy, and may be a violation of applicable insider trading and securities laws. Accordingly, you should not purchase this stock until after the financial information has been made known to the public and disseminated broadly in the financial markets.*

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*Q: Through my job at Alpha Energy, I have learned that Alpha Energy is acquiring a publicly traded company. May I buy stock in that company right now?*

*A: No. This would violate Alpha Energy*'*s Insider Trading Policy and applicable securities laws. Be aware that regulatory organizations routinely investigate trading activity leading up to a significant change in a security*'*s price.*

*Q: I understand why I shouldn*'*t reveal inside information to an outsider, but may I discuss this type of information with members of my immediate family? What about other Alpha Energy employees who are not aware of the same information I am?*

*A: No. You should be careful about inadvertently or casually revealing material inside information about Alpha Energy to your family or any person who doesn*'*t have a legitimate business need to know it. If members of your family trade in securities while in possession of material inside information that you have revealed to them about Alpha Energy, you may be exposing them and yourself to criminal and civil liability, even if you do not take advantage of this information personally.*

*If you ever inadvertently let slip material, nonpublic information to a family member or any other person without a legitimate business need to know it, inform a member of the Alpha Energy Legal Department immediately.*

**Contracting Issues**

Alpha Energy requires its employees to compete fairly and ethically for all business opportunities. Employees involved in the sale or licensing of products/services, the negotiation of agreements, or the delivery of services to customers are expected to understand and honor the terms of Alpha Energy's contractual agreements. In addition, each employee must ensure that all statements, communications, and representations to customers are accurate and truthful. Alpha Energy is committed to meeting all of its contractual obligations.

You must obtain all appropriate approvals before executing, modifying, or amending any contracts. Alpha Energy prohibits unauthorized contracts or modifications of contracts, including "side letters" or oral agreements. Only certain Alpha Energy employees have authority to sign contracts, commit Alpha Energy to acquiring products or services, or obligate Alpha Energy to third parties. Before acquiring any goods or services or making any other commitments on behalf of Alpha Energy, you must ensure that you have spending authority equal to or greater than the total amount of payments or other concessions to which you are committing Alpha Energy. You should aggregate the total cost of a purchase when making this determination. It is not permissible, for example, to open several purchase requisitions for a single vendor on the same project to avoid going outside the limits of your spending authority. If you do not have adequate spending authority, obtain approval from the manager in your chain of management who does. If you have questions about your spending authority, consult your manager.

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Before signing any document committing Alpha Energy to acquire goods or services or undertaking any other obligation, you must ensure that you have the required signing authority. If you are uncertain, contact your supervisor or the Alpha Energy Legal Department. If you have the authority to sign documents on behalf of Alpha Energy, you may not delegate this authority to another employee without the approval of Alpha Energy's CEO or General Counsel.

**Environmental Protection**

Alpha Energy is committed to protecting our natural environment and resources in all areas where we conduct business. Implementation of this policy is a primary management objective and is the responsibility of every employee.

It is Alpha Energy's policy to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Comply with all applicable environmental laws and regulations and cooperate with local, state and federal agencies in their inspection and enforcement activities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Incorporate environmental considerations in the company's planning and operational decisions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Develop and communicate environmental objectives throughout the company so that all employees understand their individual responsibilities and are appropriately trained in carrying out these objectives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Manage operations in a responsible manner and respond effectively to avoid and/or mitigate adverse environmental impacts associated with operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ In the event of an environmental mishap, report and disclose to the appropriate authorities information concerning the situation so as to guarantee a prompt and appropriate response.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Conduct periodic assessments of operations to evaluate measure and assure environmental performance and compliance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Participate in the formulation of prudent and responsible environmental laws and regulations that may impact our business and foster a constructive working relationship with environmental organizations and agencies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Promote and encourage energy efficiency and environmental protection through new and existing technologies and innovative use of natural gas and related products and services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Commit the resources needed to implement these principles.

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*Dealing with Government*

**Government Contracting**

Alpha Energy strictly observes the laws, rules, and regulations that govern the acquisition of goods and services by any governmental entity of any country and the performance of government contracts. Activities that may be appropriate when dealing with non-government customers may be improper and even illegal when dealing with government. The penalties of failing to adhere to these laws are severe and include substantial civil and criminal fines and imprisonment, and Alpha Energy could be prohibited from doing business with the government.

Alpha Energy employees who deal with any governmental agency are responsible for learning and complying with all rules that apply to government contracting and interactions with government officials and employees.

**Procurement Integrity**

No Alpha Energy employee shall attempt to obtain, from any source:

● Procurement-sensitive government information;

● Confidential internal government information, such as pre-award, source selection information; or

● Proprietary information of a competitor, including, for example, bid or proposal information, during the course of a procurement or in any other circumstances where there is reason to believe the release of such information is unauthorized.

If such information is inadvertently communicated to you by another vendor, a consultant, or a government employee, you should promptly contact the Alpha Energy Legal Department. Alpha Energy employees must strictly observe all laws and regulations regarding classified information.

**Organizational Conflict of Interest (OCI)**

Alpha Energy employees must ensure that in performing government contracts there is no actual or potential organizational conflict of interest (OCI) that would provide Alpha Energy unequal access to non-public information or an unfair advantage in a competitive procurement, or impair the objectivity of Alpha Energy employees in providing assistance or advice to the government or in performing contract work for the government; or, to the extent there is any actual or potential OCI, that any such actual or potential OCI is addressed through an appropriate OCI mitigation plan.

**Post-Government Employment Restrictions**

Various laws impose requirements and restrictions on government employees and private companies related to discussions regarding post-government employment in the private sector. In addition, these laws restrict the former government employee's activities after he or she leaves the government and accepts employment with a private company. Before engaging in any discussions related to possible employment or entering a business opportunity with a current or former government employee, you must obtain approval from the Alpha Energy Legal Department.

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**Anti-Corruption**

No one shall corruptly give or offer, directly or indirectly, anything of value to a government official to obtain or maintain business or any other advantage for Alpha Energy. It is a violation of the U.S. Foreign Corrupt Practices Act (FCPA) and other similar international anti-corruption laws to engage in any form of bribery. Penalties for violating the FCPA and other anticorruption laws are severe and can include large fines and prison time.

Bona fide expenses may be paid, and gifts provided, only if done so without corrupt intent and pursuant to Alpha Energy's policies related thereto. Address questions or requests for information regarding Alpha Energy's Anti-Corruption Policy, the FCPA, or other anti- corruption laws to the Alpha Energy Legal Department.

**Gifts, Meals, and Entertainment**

Government employees and international organizations generally are governed by laws and regulations concerning their acceptance of entertainment, meals, gifts, gratuities, and other things of value from firms and persons with whom those departments and agencies do business or over whom they have regulatory authority. In dealing with employees of government agencies and departments, it is Alpha Energy's general policy that nothing of value will be given to such individuals. If you have any questions, contact the Alpha Energy Legal Department.

**Lobbying of Government Officials**

Our interactions with the government are generally governed by lobbying laws and regulations. Lobbying is any activity that attempts to influence laws, regulations, policies, and rules, but in certain jurisdictions can also cover procurement and business development activity. These laws can apply to elected officials as well as appointed officials and career government employees. The company may have an obligation to register and/or report the company's lobbying activities under applicable law. These include activities by employees and outside consultants or advisors on government relations. Employees are responsible for knowing when their activities may be considered lobbying, and should consult the Alpha Energy Legal Department for guidance.

**Political Contributions**

Alpha Energy takes seriously its obligation to comply with the laws pertaining to political contributions. These laws vary greatly among jurisdictions and countries and are, in many cases, subject to interpretation and circumstance. Therefore, all political contributions made by Alpha Energy, including attendance, participation, and/or sponsorship of political candidates, parties, campaigns, and related events must be approved in advance by Alpha Energy's Legal Department. In addition, corporations are prohibited in many cases from giving to campaigns. Some campaign laws interpret use of corporate resources (e.g., equipment, email, stationery, or personnel) as corporate donations. You should therefore obtain approval from the Alpha Energy Legal Department before using any company resources for political campaigns or fundraising.

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**Personal Political Activity**

Alpha Energy encourages employees to participate personally in civic affairs and the political process. However, employees must:

&nbsp;&nbsp;&nbsp;&nbsp;● Make all personal political contributions with their own money;

&nbsp;&nbsp;&nbsp;&nbsp;● Conduct any personal political activities on their own personal time;

&nbsp;&nbsp;&nbsp;&nbsp;● Conduct all personal political activities in accordance with applicable laws; and

&nbsp;&nbsp;&nbsp;&nbsp;● Comply with Alpha Energy policies.

The following are guidelines regarding personal political activity:

&nbsp;&nbsp;&nbsp;&nbsp;● Your personal contributions to a candidate for elective office or a political party must not be – or appear to be – made with, reimbursed from, or facilitated by the company's funds or assets.

&nbsp;&nbsp;&nbsp;&nbsp;● You will not be paid by Alpha Energy for any time spent running for public office, serving as an elected official, campaigning for a political candidate, or attending political fundraisers unless required by law and/or approved by the Alpha Energy Legal Department.

&nbsp;&nbsp;&nbsp;&nbsp;● You can take reasonable time off without pay for personal political activities if your Alpha Energy duties permit and it is approved by your manager in accordance with current Human Resources policies. You also may use vacation time for your personal political activity.

&nbsp;&nbsp;&nbsp;&nbsp;● You may not use or permit any campaign, candidate, or political party to use any company facility or property, including a company trademark, without written approval from Alpha Energy's Legal Department.

&nbsp;&nbsp;&nbsp;&nbsp;● Any overt, visible, and partisan political activity that could cause someone to believe that your actions reflect the views or position of Alpha Energy requires the prior approval of Alpha Energy's Legal Department.

**Influencing Others**

You may not use your position to coerce nor pressure other employees to make political contributions or support candidates or political causes. In certain instances, Alpha Energy may encourage employees to support or oppose legislative issues that affect the company's business. In no instance, however, may you use your position of authority to make another employee feel compelled or pressured to:

&nbsp;&nbsp;&nbsp;&nbsp;● Work for or on behalf of any legislation, candidate, political party, or committee;

&nbsp;&nbsp;&nbsp;&nbsp;● Make contributions for any political purpose; or

&nbsp;&nbsp;&nbsp;&nbsp;● Cast a vote one way or another.

**Public Service**

Alpha Energy encourages employees to be active in the civic life of their communities. However, such service may, at times, place you in a situation that poses a conflict of interest with Alpha Energy. As a board or committee member, you may, for example, be confronted with a decision that involves Alpha Energy. It might be a decision to purchase Alpha Energy equipment or services, or it might be a decision by a board of tax assessors or a zoning board that affects Alpha Energy property. In such circumstances, your interest in Alpha Energy and your obligation to the civic organization might pull you in opposite directions and create a conflict of interest or the appearance of a conflict. Accordingly, you must withdraw from any community or civic activity that involves any decision related to Alpha Energy. If you have any questions whether your community or civic activity may create a conflict of interest with Alpha Energy or even the appearance of a conflict, you should contact Alpha Energy's Legal Department to review the activity and to obtain direction regarding your participation.

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**Colorado and Texas**

Because Alpha Energy and its subsidiaries often interact with public employees and officials, including but not limited to regulatory bodies like the Texas Railroad Commission ("TRC") and New Mexico Oil Conservation Division ("OCD"), all directors, officers and employees must be familiar with the requirements and restrictions imposed by the various lobbying activity and government interaction statutes of Texas, New Mexico and, in some circumstances, the other states in which Alpha Energy does business (collectively, the "Government Interaction Statutes"). This section will briefly set out some of the main provisions of the Government Interaction Statutes of Texas and New Mexico which could have an effect on our business. As with any other matter, any question concerning the application of the Government Interaction Statutes to your activities should be referred to Alpha Energy's Legal Department.

Essentially, a lobbyist who must register with the Texas Ethics Commission or the Secretary of State of New Mexico is any person who receives compensation from another person, group or entity to influence or attempt to influence legislation or administrative action ("lobbying"). Lobbying includes: (1) attempting to or promoting the introduction of, or seeking the defeat or enactment of legislation, (2) attempting to or promoting, opposing or seeking to influence executive approval of a bill or action, and (3) attempting to or promoting, opposing or influencing the enactment of regulations by a regulatory body (like the TRC). In essence, if your job duties require you to have regular contact with legislators, the executive branch, or regulatory authorities, you should consider carefully whether you may be a lobbyist. If so, you are subject to certain reporting requirements and certain restrictions upon your activities. The lobbying statutes may contain exceptions to the registration and reporting requirements for certain "excused lobbying activities" (e.g. appearing in judicial or administrative hearings). Questions concerning the applicability of these lobbying statutes to your activities should be referred to Alpha Energy's Legal Department.

Certain Government Interaction Statutes apply to **all persons.** These statutes take more or less a common sense approach, with their focus on prohibiting any improper influence on the official actions of a public official or public employee. All directors, officers and employees are forbidden from:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Soliciting a public official or employee to use or cause to be used equipment, facilities, time, materials, labor or other public property for your private or business benefit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Offering or giving a public official or employee or one of their family members any thing of value for the purpose of influencing official action.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Making any false statement or misrepresentation of facts to a member of the legislative or executive branch.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Causing a document containing a false statement to be received by a member of the legislative or executive branch.

*Protection of Alpha Energy Assets*

Employees are charged with safeguarding the Company's assets and property and ensuring their efficient and proper use. Employees having authority to handle Company's funds or assets are placed in a position of trust with respect to the Company. Employees must at all times maintain in good working order and safeguard from harm, theft or loss all tangible and intangible assets of the Company, whether on the Company's property or in the possession of such person. Assets of the Company may be used only for their intended use and only for Company business even though incidental personal use may be permitted. Any assets of the Company in the possession of an employee, including keys, security badges, computer equipment, software, handbooks, and internal documents, must be returned to the Company upon the termination of such person's employment or association with the Company.

Alpha Energy may employ security procedures at its facilities to monitor and maintain security, including the use of closed circuit television. Also, use of Alpha Energy computers, systems, and resources may be monitored to the extent permitted by applicable law.

In addition, Alpha Energy requires its employees to comply with Alpha Energy's information and physical security policies at all times. Alpha Energy property may not be sold, loaned, given away, or disposed of without proper authorization.

Any discovery, improvement, or invention made or conceived by an officer or employee, either solely or jointly with others, during the time he or she is employed by the Company which pertains or relates to the products or business in which the Company is engaged shall be the exclusive property of the Company whether or not patentable or copyrightable.

*Intellectual Property*

We are each responsible for protecting Alpha Energy's intellectual property rights by complying with Alpha Energy's policies and procedures for their protection. Intellectual property includes copyrights, patents, trademarks and trade secrets.

Maintaining the confidentiality of Alpha Energy's trade secrets and proprietary information is an important element of such protection. This obligation continues even after you leave the employ of Alpha Energy.

We also respect the intellectual property of others. Alpha Energy will provide any software necessary for employees to perform their functions adequately under appropriate licensing agreements with vendors. It is against Alpha Energy policy to use, copy, display, or distribute third-party copyrighted software, documentation, or other materials without permission or approval from Alpha Energy's Legal Department. For example, you may not post another entity's copyrighted content to any internal or external Web site or other electronic forum without first obtaining the necessary approvals. You are not permitted to use or copy software or documentation except to the extent that applicable license agreements allow.

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*Information Technology*

Computer systems are an important tool of Alpha Energy's business, and employees are expected to avoid misuse of the Company's computers and software by:

● Installing only software approved/purchased by Alpha Energy for which a license is maintained.

● Never copying software or related documentation.

● Reporting misuse of software or related documentation to the Legal Department.

Employees with Internet access should not:

● Upload/download files except for work-related reasons.

● Represent Alpha Energy in on-line correspondence or post information about Alpha Energy unless specifically authorized.

● Post threatening or racially, ethically or sexually offensive messages.

● Attempt unauthorized access to any computer or communications systems.

● Access pornographic or sexually explicit materials in any way.

All files, e-mail or voice-mail messages, disks, desks, work or storage areas, mail, telephones, faxes, copiers, printers, etc. are not private but are subject to monitoring and search at any time by authorized Company personnel.

*BUSINESS CONDUCT*

*Financial Integrity*

**Financial and Other Records**

Accurate and reliable financial and business records are of critical importance in meeting Alpha Energy's financial, legal, and business obligations. Alpha Energy's financial books, records, and statements shall properly document all assets and liabilities and accurately reflect all transactions of the company. No false entries shall be made on Alpha Energy's books or records for any reason. Each transaction entered into must have proper authorization and approval, followed by proper and complete accounting and reporting of the transaction.

Below are some helpful guidelines regarding financial record keeping:

&nbsp;&nbsp;&nbsp;&nbsp;● Billing of time or expenses by consultants, submission of Alpha Energy timecards, entry of orders by sales administrators, and submission of travel and expense reports shall be made timely and accurately and in compliance with Alpha Energy

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&nbsp;&nbsp;&nbsp;&nbsp;● policy, professional standards, regulations, and laws.

&nbsp;&nbsp;&nbsp;&nbsp;● No documents shall be inappropriately altered nor shall they be signed by those lacking proper authority.

&nbsp;&nbsp;&nbsp;&nbsp;● Alpha Energy funds or assets shall not be used for any unethical, inappropriate, or illegal purpose.

&nbsp;&nbsp;&nbsp;&nbsp;● The handling and disbursement of funds related to a Alpha Energy transaction must be pursuant to a duly authorized Alpha Energy written contract with clearly defined procedures.

&nbsp;&nbsp;&nbsp;&nbsp;● No undisclosed nor unrecorded fund nor asset related to any Alpha Energy transaction shall be established or maintained for any purpose.

&nbsp;&nbsp;&nbsp;&nbsp;● No payment on behalf of Alpha Energy shall be made or approved with the understanding that it will or might be used for something other than the stated purpose.

To maintain an ethical environment, Alpha Energy relies on an integrated system of internal checks and balances. These controls, mainly in the form of policies and procedures, assure that activities and transactions are executed in accordance with management's authorization. You are responsible for understanding and maintaining the system of controls established for their operations.

**Records Retention**

The <u>Alpha Energy Records Retention Policy</u> ("Retention Policy") sets forth the guidelines governing the retention and disposal of Alpha Energy business records. The Retention Policy requires that you maintain records in accordance with the <u>Corporate Records Retention</u> <u>Schedule</u> ("Retention Schedule"). The Retention Schedule identifies the company records that we must retain and the retention period for each record type. You must not retain records that are not identified on the Retention Schedule, unless the records have a current business purpose or the Alpha Energy Legal Department has instructed that the records be retained or preserved. You are responsible for reading and abiding by the Retention Policy and Retention Schedule.

The Retention Policy and the Retention Schedule cover both electronic (soft copy) and hard copy materials. They apply to ALL record types regardless of the medium in which they exist, including:

&nbsp;&nbsp;&nbsp;&nbsp;● Paper;

&nbsp;&nbsp;&nbsp;&nbsp;● Email;

&nbsp;&nbsp;&nbsp;&nbsp;● Video;

&nbsp;&nbsp;&nbsp;&nbsp;● Hard drive; and

&nbsp;&nbsp;&nbsp;&nbsp;● Compact disc or other electronic storage device.

You should give special care to ensure that records containing confidential information are retained and disposed of in accordance with both the Retention Policy and the Information Protection Policy.

If it appears that local circumstances require a record to be retained for a longer period, please contact the Alpha Energy Legal Department. If you have questions about the Retention Policy or the Retention Schedule, contact the Alpha Energy Legal Department.

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**Public Disclosures**

As a public company, Alpha Energy must disclose accurate and complete information regarding the company and the results of its operations. Our policy is to report Alpha Energy's financial results and other significant developments fully, fairly, accurately, timely, and understandably. Alpha Energy will not tolerate unauthorized "leaks" or disclosures of corporate information to the press or financial community.

All communications with the press and financial community must be authorized by Alpha Energy's Public Relations or Investor Relations organizations. Those organizations alone, at the direction of Executive Management, are responsible for determining the appropriate spokespersons for communicating with the press and analysts. Direct any inquiries from the press or financial community immediately to Alpha Energy Public Relations or Alpha Energy Investor Relations. For further information, see Alpha Energy's Policy Regarding Communications with the Press and Analysts, located on the Alpha Energy Legal Department Web site.

*Q: You receive a call from an investment analyst who heard that Alpha Energy is having a bad quarter. Having just sat through a forecasting call, you know that the opposite is true* – *Alpha Energy is about to have an amazing quarter. May you set this investment analyst straight? After all, isn't it a good idea to correct such misinformation?*

*A: No. You should not speak with this analyst. Only spokespersons authorized by Alpha Energy Investor Relations, at the direction of Executive Management, are allowed to speak with the financial community about Alpha Energy or its financial prospects. Alpha Energy commits to providing full, fair, understandable, timely, and accurate public information about its financial prospects, and it does so openly, rather than selectively. Refer any such inquiries to Alpha Energy Investor Relations. Other than that, make no comment.*

*Q: You receive a call from a reporter who wants more information about a recent Alpha Energy product announcement. You are very familiar with the product. May you speak with this reporter?*

*A: No, at least not without first obtaining permission from Alpha Energy Public Relations. Alpha Energy Public Relations must approve in advance all communications with the press. Alpha Energy Public Relations may conclude that you are the best spokesperson for the company on this issue, but they* – *not you* – *must make that decision.*

*Business Courtesies You May Extend*

Furnishing meals, refreshments, entertainment, and event access in conjunction with business discussions with non-government personnel is a commonly accepted practice. You may do so when it is appropriate to the circumstances. Such practices, however, must not violate the standards of conduct of the recipient's organization, any contractual agreement with a customer, or Alpha Energy's Travel and Expense Policy. You are responsible for familiarizing yourself with any such standards, agreements, and policies and for complying with them.

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Alpha Energy prohibits giving anything of value (including charitable donations or sponsorship of events) directly or indirectly to any private individual, firm, or entity as a means of improperly inducing business. Employees who make, facilitate, and/or approve expenditures for meals, refreshments, or entertainment must use discretion and care to ensure that such expenditures are in the ordinary and proper course of business and could not reasonably be construed as bribes or improper inducement.

Alpha Energy's standards and the applicable laws for dealing with government employees and officials are more stringent than standards for commercial company employees. In dealing with government employees and officials, it is our general policy that nothing of value will be given to such individuals. Limited exceptions that may apply are covered in the Anti-Corruption Policy. You are responsible for being familiar with the rules and regulations of the government agencies and departments with which you interact. Contact the Alpha Energy Legal Department if you have any questions about your activities and interactions with the government.

In any case, business courtesies must be nominal enough not to appear to influence the judgment of the recipient to secure unfair preferential treatment or gain improper advantage. A final test of appropriate business courtesies, even if allowed under the law, is whether public disclosure would be embarrassing to Alpha Energy or the recipient.

*Business Courtesies You May Receive*

**Gifts**

Alpha Energy employees generally may accept unsolicited gifts or other business courtesies from actual or potential customers, suppliers, or other business partners provided they are not of material value and are not given with the purpose of influencing one's judgment.

It is never appropriate to solicit gifts or other courtesies directly or indirectly. If you are offered a gift or other business courtesy of material value from an individual, firm, or representative of a firm who has or seeks a business relationship with Alpha Energy, you must demonstrate that the gift could not be construed as an attempt by the offering party to secure favorable treatment. You must obtain written approval from the Chief Financial Officer before accepting the gift. Neither you nor any member of your family may accept any loan, guarantee of loan, or payment from an individual or firm doing or seeking business with Alpha Energy. Exceptions to this include only loans from recognized banks and financial institutions that are generally available at market rates and terms.

Similarly, you may not accept finders' fees, referral fees, or other incentive payments or perquisites from third parties to whom Alpha Energy may refer business. Generally, incentive programs offered by third parties are discouraged. The Chief Financial Officer must first approve any such incentive programs.

**Entertainment**

You may accept occasional meals, refreshments, or other entertainment appropriate to the circumstances in connection with normal business discussions. Again, it is inappropriate to accept such favors if they are offered solely to influence your business decision. If an individual or firm doing or seeking business with Alpha Energy offers you entertainment that is more than modest or routine, you must obtain the written approval of the Chief Financial Officer before accepting. Every employee is personally responsible for ensuring that acceptance of any business courtesies, gifts, or entertainment is proper and does not reasonably appear to be an attempt by the offering party to secure favorable treatment.

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*Conflicts of Interest*

The term *conflict of interest* describes any circumstance that could cast doubt on an employee's ability to act with total objectivity with regard to Alpha Energy's interests. Alpha Energy wants its employees' loyalty to come easily, free from any conflicting interests.

All employees have a duty to avoid financial, business, or other relationships that might be opposed to the interests of Alpha Energy or might cause a conflict with the performance of their duties. Employees should conduct themselves in a manner that avoids even the appearance of conflict between their personal interests and those of Alpha Energy.

Conflict of interest situations may arise in many ways. Examples of improper actions by Alpha Energy employees when acting in conflict with Alpha Energy include, but are not limited to, the following:

&nbsp;&nbsp;&nbsp;&nbsp;● Employment by a competitor, regardless of the nature of the employment, while employed by Alpha Energy;

&nbsp;&nbsp;&nbsp;&nbsp;● Placement of business with any company in which an employee, or any member of the employee's family, has a substantial ownership interest or management responsibility;

&nbsp;&nbsp;&nbsp;&nbsp;● Ownership of, or substantial interest in, a company that is a competitor with or a supplier of Alpha Energy by an employee, or any member of the employee's family;

&nbsp;&nbsp;&nbsp;&nbsp;● Acting independently as a consultant to an Alpha Energy competitor, customer, or supplier;

&nbsp;&nbsp;&nbsp;&nbsp;● Engaging in any activity or employment that interferes with or detracts from an employee's work at Alpha Energy, or requires an employee to disclose Alpha Energy proprietary information; or

&nbsp;&nbsp;&nbsp;&nbsp;● Service on a board of directors or as a technical advisor to an actual or potential competitor, customer, partner, or supplier of Alpha Energy.

Sometimes, a conflict of interest will develop accidentally or unexpectedly, and the appearance of a conflict of interest can also easily arise. If you feel that you have a conflict, actual or potential, report all pertinent details in writing to your supervisor. The presence of a conflict does not necessarily mean that the proposed activity will be prohibited. Your responsibility is to fully disclose all aspects of the conflict to your supervisor and remove yourself entirely from the decision making process.

With respect specifically to any request to serve as a director or technical advisor to another company, again you must be very sensitive to an actual or potential conflict of interest. Generally, no conflict is presented if your service as a director or advisor would (1) require at most a very minimal commitment of time during your normal Alpha Energy work hours and would not otherwise detract from your job responsibilities at Alpha Energy, (2) not cause you to disclose Alpha Energy proprietary information, and (3) not be for an actual or potential Alpha Energy competitor, customer, supplier, or other business partner. Regardless of whether you perceive a conflict, before serving as a director or technical advisor to any company, or engaging in any activity that may involve a conflict, you must first fully disclose the opportunity to your supervisor and obtain his or her written approval, as well as the written approval of the General Counsel.

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Additionally, if you observe any situation involving another employee that you believe in good faith to be a conflict of interest, report the situation to your supervisor. Your supervisor will be responsible for referring the matter to the General Counsel, as appropriate, for resolution. You may also report conflicts of interest directly to the General Counsel, if appropriate. Reports from employees will be handled as confidentially as possible.

Alpha Energy's senior officers (Chief Executive Officer, President(s), Chief Operating Officer, Chief Financial Officer, Chief Accounting Officer, General Counsel, each Executive Vice President, and each Senior Vice President) are subject to both this Code and Alpha Energy's Supplemental Conflict of Interest Policy for Senior Officers. Non-employee members of the Board are subject to the conflict of interest provisions of Alpha Energy's Corporate Governance Guidelines in lieu of the conflict of interest provisions contained in this Code. The Supplemental Conflict of Interest Policy for Senior Officers and the Corporate Governance Guidelines are posted on the Corporate Governance section of Alpha Energy's Investor Relations Web site. Senior officers and members of the Board who have questions regarding this Code or other relevant policies should contact Alpha Energy's Legal Department. No director, officer or employee of Alpha Energy shall have any position with or a substantial interest in any other business enterprise operated for a profit, the existence of which would conflict or might conflict with the proper performance of his duties or responsibilities, or which might tend to affect independence of judgment or action with respect to transactions between Alpha Energy and such other business enterprise, without full and complete disclosure thereof. No director, officer or employee of Alpha Energy should derive personal economic gain (directly, through a family member or otherwise) from a transaction to which Alpha Energy is a party unless Alpha Energy is advised of such director's, officer's or employee's potential to benefit from the transaction. Any director, officer or employee who has such a conflicting or possibly conflicting interest with respect to any transaction which is known to be under consideration by Alpha Energy, Inc, or any of its affiliates, is required to make timely disclosure thereof so it may be part of Alpha Energy's consideration of the transaction.

Alpha Energy is also sensitive to undertakings or affiliations with non-profit organizations. While Alpha Energy encourages participation with worthwhile non-profit organizations, each employee must take care that his or her participation does not adversely impact or reflect unfavorably upon Alpha Energy For example, circumstances could occur where a non-profit organization's mission was in conflict with Alpha Energy's mission or otherwise worked against Alpha Energy's interests. Accordingly, if there is any question in your mind about your participation or affiliation with a non-profit organization, you should bring it to the attention of Kruse Landa Maycock & Ricks.

In addition to the foregoing, but without limiting its intent, the following Guidelines are adopted:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Under no circumstances will any director, officer or employee of Alpha Energy accept or give cash for the purpose of influencing a business decision, or which could be construed as having been given or received for that purpose.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Without prior approval in the manner described in paragraph (11) below, no director, officer or employee, personally, through a family member or otherwise shall serve as a director, officer, employee or consultant to companies, which directly compete with Alpha Energy or which provide services to Alpha Energy or its affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Directors, officers and employees may not take or use for themselves any business opportunity which may come to them individually but which might be of interest to Alpha Energy Any such opportunity in a line of business in which Alpha Energy or an affiliate has, or can reasonably be expected to have an interest, must be disclosed to the General Counsel and made available to Alpha Energy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) No director, officer or employee shall accept gifts from any person, firm or corporation doing business with Alpha Energy under any circumstances from which it could be reasonably inferred that the purpose of the gift could be to influence the director, officer or employee in the conduct of Alpha Energy transactions with the donor. A gift includes anything of value that is transferred to another for which no specific service or compensation is expected or received. This policy does not preclude business or seasonal gifts of nominal value or other gifts expressly permitted under the Code. It is also permissible for a director, officer or employee to give or receive entertainment of moderate value, assuming a legitimate business purpose is being served. However, it is the responsibility of every director, officer and employee to avoid even the appearance of impropriety. If there is any doubt about whether a gift is of nominal value or whether a particular entertainment activity complies with this policy, a director or executive officer should contact General Counsel for guidance and any other officer or employee should contact the Senior Vice President in charge of his/her business unit for guidance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) No director, officer or employee shall, either directly or indirectly, invest in (i) any real property in which he knows that Alpha Energy or any affiliate has, or is considering any investment or a tenancy, or (ii) any real property, the value of which may be affected by any action of Alpha Energy of which he has special knowledge.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) No director, officer or employee shall purchase stocks, bonds, or other investment interests or securities where such purchase is based on information obtained by reason of his official position in Alpha Energy, unless he shall have first secured permission to make such purchase from General Counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) Any director, officer or employee concerned with investment or acquisition activities, who has any investment, either directly or indirectly, in any corporation or business enterprise which is under consideration for acquisition by Alpha Energy or any affiliate must make full disclosure of the circumstances of any investment held in such corporation or enterprise to General Counsel, who shall then report such information to the President and the Audit Committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) All directors, officers and employees shall make timely disclosure to General Counsel of any situation which creates a conflict of interest or which could give the perception of a conflict of interest (whether relating to a for-profit or non-profit entity) between Alpha Energy and an individual's duties and responsibilities. All such situations disclosed to General Counsel shall be reported to the Audit Committee.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) All directors, officers and employees shall make timely disclosure to General Counsel of any situation which creates or could give the perception of creating an indirect conflict of interest between Alpha Energy and an individual's duties and responsibilities as a result of transactions involving such individual's family members or business associates. The disclosure should in all cases be sufficient to enable Alpha Energy to determine the effect of any such indirect conflict of interest on the performance of the individual's duties and responsibilities. All such situations disclosed to General Counsel shall be reported to the Audit Committee.

*Protecting Confidential Information*

You are required to protect confidential information to which you have access in connection with your Alpha Energy employment. Alpha Energy's privacy policies govern the collection, use, transfer, and security of employee data, customer and prospect data, and data Alpha Energy may access in connection with services.

You are required to abide by these policies when collecting or processing the relevant personal information.

The Alpha Energy Information Protection Policy, sets forth the requirements for treatment of confidential information. To ensure confidentiality of Alpha Energy information, employees must adhere to the following principles in addition to the specific policies set forth in the Information Protection Policy:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Employees must not disclose any confidential information, either during or after employment, except to people authorized by Alpha Energy and bound by confidentiality to the company. Confidential Information means information that (i) is disclosed to or known by an employee as a consequence of employment with Alpha Energy, (ii) is not generally known outside the employment and (iii) relates to Alpha Energy's business. The term "confidential information" is intended to include Alpha Energy's trade secrets as well as information relating to products, processes or ideas developed for or used by Alpha Energy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Similar restrictions, usually spelled out in contracts, apply to information obtained from Alpha Energy's customers and suppliers. Alpha Energy's customers and suppliers have placed their trust in Alpha Energy in revealing their confidential information, and Alpha Energy employees must comply with these restrictions.

The Information Protection Policy provides a description of different categories of confidential information, such as:

● Public

● Confidential – Alpha Energy Internal

● Confidential – Alpha Energy Restricted

● Confidential – Alpha Energy Highly Restricted

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The Information Protection Policy provides guidance on the proper handling of each category of information, including restrictions on use, disclosure, storage, transmission, and deletion.

All information related to Alpha Energy's business that is not intended for public disclosure should be considered confidential. Confidential information includes:

&nbsp;&nbsp;&nbsp;&nbsp;● Software and other inventions or developments (regardless of the stage of development);

&nbsp;&nbsp;&nbsp;&nbsp;● Marketing and sales plans;

&nbsp;&nbsp;&nbsp;&nbsp;● Competitive analyses;

&nbsp;&nbsp;&nbsp;&nbsp;● Exploration, drilling, development and other plans;

&nbsp;&nbsp;&nbsp;&nbsp;● Pricing;

&nbsp;&nbsp;&nbsp;&nbsp;● Potential contracts, mergers, or acquisitions;

&nbsp;&nbsp;&nbsp;&nbsp;● Business and financial plans or forecasts; and

&nbsp;&nbsp;&nbsp;&nbsp;● Employee information.

Third-party systems should not be used to record Alpha Energy financial, sales, marketing, or other data. Record or process Alpha Energy's confidential business data with Alpha Energy systems only.

In addition, information concerning Alpha Energy's customers, partners, prospective customers, and vendors that was provided to Alpha Energy in confidence is considered confidential information.

Alpha Energy also expects employees to abide by all security policies. Do not access or attempt to access systems or physical areas without appropriate authorization. Similarly, you may not allow third parties to access Alpha Energy systems or physical areas without obtaining appropriate authorization. Report any unauthorized access of a Alpha Energy facility and report any unauthorized access of Alpha Energy's networks or systems to the Alpha Energy Legal Department.

Your obligation to protect company confidential information and personal information continues after the end of your employment with Alpha Energy. Moreover, just as we expect employees to abide by their obligations not to disclose this information after they leave, we expect employees to abide by their obligations to protect the confidential information of their former employers. No confidential information obtained during or as a result of your work with former employers should be brought on Alpha Energy premises or used in any form in your work at Alpha Energy.

Gathering Information About Our Competitors or Other Third Parties

You may not seek to obtain proprietary information about Alpha Energy competitors, and you may not seek to obtain any information about Alpha Energy competitors or other third parties illegally or in a way that involves a breach of integrity or breach of any confidentiality or employment agreement. You must never misrepresent your identity when attempting to collect competitive information. In the event that you inadvertently obtain a third party's confidential or proprietary information without authorization, you must immediately contact Alpha Energy Legal Department. Unless Alpha Energy Legal Department instructs otherwise, you must promptly destroy all copies of such information in your possession.

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We may make appropriate observations about competitors' products and activities when basing them on publicly available information, such as public presentations and marketing documents, journal and magazine articles, advertisements, and other published information.

*ALPHA ENERGY*'*S RELATIONSHIPS*

*Alpha Energy and Its Employees*

We encourage you to express ideas for improving the workplace and any concerns you may have about the workplace or specific job-related problems. We will not retaliate nor tolerate retaliation against any employee who raises an issue, complaint, or concern in good faith. Our goal is to deal fairly and equitably with each employee.

**Diversity**

Alpha Energy affirms the principle of equal employment opportunity without regard to any protected characteristic, including but not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;● Race;

&nbsp;&nbsp;&nbsp;&nbsp;● Religion;

&nbsp;&nbsp;&nbsp;&nbsp;● National origin;

&nbsp;&nbsp;&nbsp;&nbsp;● Color;

&nbsp;&nbsp;&nbsp;&nbsp;● Gender;

&nbsp;&nbsp;&nbsp;&nbsp;● Gender identity;

&nbsp;&nbsp;&nbsp;&nbsp;● Age;

&nbsp;&nbsp;&nbsp;&nbsp;● Disability;

&nbsp;&nbsp;&nbsp;&nbsp;● Pregnancy;

&nbsp;&nbsp;&nbsp;&nbsp;● Marital status;

&nbsp;&nbsp;&nbsp;&nbsp;● National origin/ancestry;

&nbsp;&nbsp;&nbsp;&nbsp;● Military status; or

&nbsp;&nbsp;&nbsp;&nbsp;● Sexual orientation.

We practice and promote such policies in all locations as appropriate under the law. We affirm this principle of freedom from discrimination in all aspects of the employment relationship, from recruitment and hiring, through performance evaluations, compensation, and promotions, to the end of your employment relationship with Alpha Energy.

We base personnel actions strictly on individual ability, performance, experience, and company need. We avoid actions influenced by personal relationships and discriminatory practices of any kind. Our goal is to compensate personnel – with wages, salaries, and other benefits – in relation to their responsibilities, performance, and service. Alpha Energy is also committed to adhering to wage, hour, and minimum age guidelines provided by applicable laws. We endeavor to structure the content of jobs so that work provides personal satisfaction and challenge.

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**Harassment**

Alpha Energy's policy is to provide a work environment free from harassment. Although "harassment" most frequently refers to sexual harassment, workplace harassment may also include harassment based upon a person's race, religion, national origin, gender, sexual orientation, gender identity, age, disability, or other protected characteristic. Alpha Energy prohibits harassment in any form, whether physical, verbal, or non-verbal.

Report instances of harassment to your supervisor or, as appropriate, to Human Resources. Your report will be kept confidential to the greatest extent possible, and no complainant nor witness will suffer retaliation because of a report made in good faith.

**Health and Safety**

We are committed to protecting the health and safety of our employees, visitors, and the public. Our policy is to maintain our facilities and run our business operations in a manner that does not jeopardize the occupational health and safety of employees. Compliance with health and safety laws and Alpha Energy policy is expected of all employees. Threats or acts of violence against Alpha Energy employees, temporary employees, independent contractors, customers, clients, partners, suppliers, or other persons and/or property will not be tolerated. Immediately report potential threats or acts of violence. In case of an emergency, contact local law enforcement.

**Taxation**

We expect employees to pay all applicable income taxes on all income from Alpha Energy, including taxes on income from the exercise of stock options.

*Alpha Energy and Its Partners*

Alpha Energy's high standards can only be met with our partners' cooperation. Alpha Energy expects its partners to adhere to high ethical standards, to conduct business fairly and ethically, and to avoid engaging in any activity that involves even the appearance of impropriety. We also require our partners to comply with all applicable laws and regulations.

*Alpha Energy and Its Suppliers*

We maintain open and frank business dealings with our suppliers and strive to develop mutually advantageous relationships. We expect our suppliers to adhere to high ethical standards and to avoid engaging in any activity that involves even the appearance of impropriety. We also expect our suppliers to comply with all applicable laws and regulations and to ensure that all goods and services provided by them conform to all applicable legal standards

*ENFORCEMENT*

The strength of Alpha Energy is its people. Alpha Energy is fortunate to have a talented group of employees. We trust that each of you will recognize that we must adhere to the standards of this Code and uphold Alpha Energy's business values if we are to continue as leaders in our industry.

Though we are confident that we can count on every member of the Alpha Energy team to do his or her part, we would be remiss if we did not state categorically that deviations from our policies or business conduct standards will not be tolerated.

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*The Investigation Process*

General Counsel is responsible for addressing business conduct and ethical concerns and for the investigation and resolution of allegations of misconduct. Investigations will be conducted in an ethical manner and in compliance with applicable law and Alpha Energy policies.

Alpha Energy may employ a variety of methods to conduct investigations. To the extent permitted by applicable law, investigation methods may include interviews with the parties and witnesses, review of relevant financial and other records, criminal and background checks, and monitoring and/or analysis of computers, systems, offices, and other resources. Inappropriate investigative techniques (e.g., pretexting and other social engineering activities) are prohibited.

You have a duty to fully cooperate with investigations and to promptly, completely, and truthfully comply with all requests for information, interviews, or documents during the course of an investigation. Alpha Energy treats as confidential all reports of alleged misconduct, and only those persons with a need to know are informed of and involved in an investigation. Only the Alpha Energy Legal Department or Chief Compliance & Ethics Officer may commence a Code of Conduct investigation and/or a forensic investigation relating to a Code of Conduct violation. All reports of misconduct and related investigative records are treated in accordance with Alpha Energy's Internal Privacy Policy and Alpha Energy's Information Protection Policy.

*Disciplinary Action*

We promote consistency in the application of disciplinary action. Factors considered in determining appropriate disciplinary action may include whether any laws were violated; whether the Alpha Energy *Code of Ethics and Business Conduct* or any other company policies were violated; Alpha Energy's response to similar situations; whether the law in the relevant jurisdiction requires a particular action; and the employee's tenure, performance, and disciplinary history. General Counsel, in consultation with other appropriate departments, review relevant factors of each case in determining appropriate disciplinary action.

At the end of an investigation, appropriate disciplinary action will be taken, or no disciplinary action may be necessary, based on the findings. In addition, Alpha Energy may report civil or criminal violations to the relevant authorities.

Alpha Energy will take disciplinary action against any individual violating these standards. Specifically, it will take disciplinary action against any employee or manager who is found to have:

&nbsp;&nbsp;&nbsp;&nbsp;● Authorized, condoned, participated in, or concealed actions that are in violation of Alpha Energy policies or business conduct standards;

&nbsp;&nbsp;&nbsp;&nbsp;● Disregarded or approved a violation;

&nbsp;&nbsp;&nbsp;&nbsp;● Through lack of diligence in supervision, failed to prevent or report violations; or

&nbsp;&nbsp;&nbsp;&nbsp;● Retaliated, directly or indirectly, or encouraged others to retaliate, against an employee who reported a potential violation of Alpha Energy policies or business conduct standards.

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Unsubstantiated allegations will have no effect on an employee accused of wrongdoing, and retaliation will not be tolerated against any employee who reports a concern in good faith or cooperates with a compliance investigation.

Any covered person who is found to have violated this Code, or knowingly permits a covered person under his or her supervision to do so, may be subject to immediate disciplinary action, including, but not limited to, reassignment, demotion, or, where appropriate, dismissal and legal proceedings to recover the amount of any improper expenditures and any other losses that the Company may have incurred as a result of such violation. Violations of this Code may also result in prosecution of the individual under applicable criminal law statutes.

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*INTERPRETATION*

All questions regarding the interpretation, scope, and application of the policies set forth in this Code should be referred to the Chief Executive Officer or General Counsel of the Company.

*ACKNOWLEDGMENT*

Each covered person will be required to sign an acknowledgment annually certifying that he or she has read, understands and agrees to abide by the policies set forth in this Code.

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**ACKNOWLEDGMENT**

By signing below, I acknowledge and certify that I have received, read, and understand Alpha Energy, Inc.'s Code of Ethics and Business Conduct (the "Code").

I agree (i) to comply with the Code and conduct the business of the Company in keeping with the highest ethical standards and (ii) to comply with international, federal, state and local laws applicable to the Company's businesses. I understand that failure to comply with the Code will lead to disciplinary action by the Company, which may include termination of my employment and/or the reduction of compensation or demotion.

(Please Print)

Name

Business Unit/Location  

Position Title  

Signature

Date

<u>Please sign and return entire document to the Company</u><u>'</u><u>s General Counsel and keep a copy</u> <u>hereof for your own files.</u>

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## Exhibit 99.2

**Exhibit 99.2**

EXHIBIT B

**Alpha Energy, Inc.**

**AUDIT<br> COMMITTEE<br> CHARTER**

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**AUDIT COMMITTEE CHARTER**

&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Purpose** 

The purpose of the Audit Committee (the "Committee") is to assist the Board of Directors (the "Board") in fulfilling its oversight responsibilities by reviewing the financial information which will be provided to the shareholders and others; reviewing the systems of internal controls which management and the Board have established; overseeing the Company's compliance with legal and regulatory requirements; appointing, retaining and overseeing the performance of independent accountants; overseeing the Company's accounting and financial reporting processes and the audits of the Company's financial statements; and monitoring compliance with the Company's Code of Ethics and Business Conduct (the "Code") and making certain determinations and providing other oversight as set forth in the Code and in the Company's Supplemental Conflict of Interest Policies (the "COI Policies").

The Committee will fulfill these responsibilities by carrying out the activities enumerated in Section 3 of the Charter. The Committee shall be given full and direct access to the Board Chairman, Company executives and employees and independent accountants as necessary to carry out these responsibilities. However, the Committee's function is one of oversight only and shall not relieve the Company's management of its responsibilities for preparing financial statements which accurately and fairly present the Company's financial results and condition, or the responsibilities of the independent accountants relating to the audit or review of financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;**2.** **Composition of the Committee** 

The Committee shall be comprised of not less than three directors, each of whom will be independent as required by Section 10A(m) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), any rules and regulations promulgated thereunder by the Securities and Exchange Commission, including Rule 10A-3(b)(1) (the "SEC"), and the rules of The Nasdaq Stock Market ("Nasdaq"). The Board shall appoint the members and the Chairman of the Committee on the recommendation of the Nomination and Governance Committee. Membership on the Committee shall rotate at the Board's discretion. The Board shall fill any vacancies on the Committee and may remove a Committee member from the membership of the Committee at any time without cause.

No member of the Committee shall have participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the preceding three years. Each appointed Committee member shall be subject to annual reconfirmation and may be removed by the Board at any time.

All members of the Committee shall be able to read and understand fundamental financial statements, including a balance sheet, income statement and cash flow statement. At least one member of the Committee shall have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual's financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities and shall otherwise meet the requirements of applicable federal law, rules and regulations.

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&nbsp;&nbsp;&nbsp;&nbsp;**3.** **Responsibilities and Duties** 

To fulfill its responsibilities and duties, the Committee shall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Review annually the Committee Charter for adequacy and recommend any changes to the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Review the significant accounting principles, policies and practices followed by the Company in accounting for and reporting its financial results of operations in accordance with generally accepted accounting principles ("GAAP").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Review the financial and risk management policies followed by the Company in operating its business activities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Review the Company's annual audited financial statements, related disclosures, including the MD&A portion of the Company's filings, and discuss with the independent accountants the matters required to be discussed by the auditing standards of the Public Company Accounting Oversight Board ("PCAOB"), including (a) the quality as well as acceptability of the accounting principles applied in the financial statements, and (b) new or changed accounting policies; significant estimates, judgments, uncertainties or unusual transactions; and accounting policies relating to significant financial statement items.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Review any management letters or internal control reports prepared by the independent accountants or the Company's internal auditors and responses to prior management letters, and review with the independent accountants the Company's internal financial controls.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Review the effectiveness of the independent audit effort, including approval of the scope of, and fees charged in connection with, the annual audit, quarterly reviews and any non-audit services being provided.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. Be directly responsible for the appointment, determination of the compensation for, retention and oversight of the work of the independent accountant employed to conduct the audit (including resolution of disagreements between the independent accountants and management regarding financial reporting) or other audit, review or attest services. The independent accountants shall report directly to the Committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. Pre-approve all audit services and permissible non-audit services by the independent accountants, as set forth in Section 10A of the Exchange Act and the rules and regulations promulgated thereunder by the SEC. The Committee may establish pre-approval policies and procedures, as permitted by Section 10A of the Exchange Act and the rules and regulations promulgated thereunder by the SEC, for the engagement of independent accountants to render services to the Company, including but not limited to policies that would allow the delegation of pre-approval authority to one or more members of the Committee, provided that any pre-approvals delegated to one or more members of the Committee are reported to the Committee at its next scheduled meeting.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. Review the hiring policies for any employees or former employees of the independent accountants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. Obtain on an annual basis from the independent accountants the written disclosures and the letter required by the applicable requirements of the PCAOB and NASDAQ regarding relationships between the accountants and the Company, the independent accountants' communications with the audit committee concerning independence, and such other matters as the Committee may request, and review and discuss with the accountants any disclosed relationships or services the accountants have with the Company which may affect the accountants' independence and objectivity. The Committee is responsible for taking, or recommending that the full Board take, appropriate action to oversee the independence of the independent accountants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. For each of the first three fiscal quarters and at year end, at a Committee meeting review with management the financial results, the proposed earnings press release and formal guidance which the Company may plan to offer, and review with the independent accountants the results of their review of the interim financial information and audit of the annual financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. Review management's analysis of any significant accounting issues, changes, estimates, judgments or unusual items relating to the financial statements and the selection, application and effects of critical accounting policies applied by the Company (including an analysis of the effect of alternative GAAP methods) and review with the independent accountants the reports on such subjects delivered pursuant to Section 10A(k) of the Exchange Act and the rules and regulations promulgated thereunder by the SEC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. Following completion of the annual audit, review separately with the independent accountants, internal control services department and management any significant difficulties encountered during the course of the audit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. Review, at least annually, with the internal control services department and others the responsibilities and activities of that department and the Company's internal control systems, the Company's policies on compliance with laws and regulations, and the methods for monitoring compliance with such policies, and shall recommend improvements of such controls, policies, methods and procedures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. Discuss guidelines and policies to govern the process by which risk assessment and risk management is undertaken by management, and discuss the Company's major financial risk exposures and the steps management has taken to monitor and control such exposures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. Review recommendations made by the independent accountant and such other matters in relation to the accounting, auditing and financial reporting practices and procedures of the Company as the Committee may, in its discretion, deem desirable in connection with the review functions if the Committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17. Review compliance with the Company's Code and Conflict of Interest Policies, and make determinations and exercise authority thereunder (including approvals with respect to conflict of interest issues), as expressly contemplated thereby. The Committee shall not have the power to grant waivers to the Code. Any waiver of the Code with respect to a director or executive officer may only be granted by the Board.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18. Approve or disapprove of any related party transaction proposed by the Company after the Committee's review for potential conflicts of interest. A transaction will be considered a "related party transaction" if the transaction would be required to be disclosed under Item 404 of Regulation S-K.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19. Engage and determine funding for such independent professional advisers and counsel as the Committee determines are appropriate to carry out its functions hereunder. The Company shall provide appropriate funding to the Committee, as determined by the Committee, for payment of (1) compensation to the independent accountants for services approved by the Committee, (2) compensation to any outside advisers retained by the Committee, and (3) ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20. Report to the Board on a regular basis on the major events covered by the Committee and make recommendations to the Board and management concerning these matters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21. Perform any other activities consistent with this charter, the Company's Bylaws and governing law as the Committee or the Board deems necessary or appropriate, including but not limited to the Company's legal and regulatory compliance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22. Conduct appropriate review and oversight of related party transactions, as defined by applicable rules of Nasdaq, to which the Company is a party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23. Establish procedures for: (a) the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and (b) the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

&nbsp;&nbsp;&nbsp;&nbsp;**4.** **Committee Meetings** 

The Committee will meet on a regular basis at least 4 times each year, and will hold special meetings as circumstances require. The timing of the meetings to be scheduled for an upcoming fiscal year shall be determined by the Committee prior to the beginning of such fiscal year. A calendar of proposed meetings will be reviewed by the Committee at the same time as the annual Committee Charter review. The calendar shall include appropriate meetings to be held separately with representatives of the independent accountants, management and the Internal Control Services department, including a meeting to conduct the reviews required under Section 3.13 above. In addition, the Committee will meet at any time that the independent accountants believe communication to the Committee is required.

At all Committee meetings, a majority of the total number of members shall constitute a quorum. All meetings shall be held subject to and in accordance with applicable sections of the Colorado Business Corporation Act. Minutes shall be kept of each meeting of the Committee.

![smlpglogo.jpg](smlpglogo.jpg)- 5

## Exhibit 99.3

**Exhibit 99.3**

**EXIBIT C**

## Alpha Energy, Inc.

## COMPENSATION AND<br> MANAGEMENT<br> DEVELOPMENT<br> COMMITTEE CHARTER

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**COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE CHARTER**

&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Purpose** 

The Compensation and Management Development Committee's (the "Committee") basic responsibility is to review the performance and development of the Company's management in achieving corporate goals and objectives and to assure that the Company's executive officers (as defined below) are compensated effectively in a manner consistent with the strategy of the Company, competitive practice, sound corporate governance principles and shareholder interests. Toward that end, the Committee will oversee, review and administer all compensation, equity and employee benefit plans and programs.

&nbsp;&nbsp;&nbsp;&nbsp;**2.** **Composition of the Committee** 

The Committee will consist of not less than three directors, each of whom will be an "independent director" as required by the rules of The Nasdaq Stock Market ("Nasdaq") and applicable state and federal law and rules and regulations promulgated thereunder, a "non-employee director" within the meaning of Rule 16b-3 issued by the Securities and Exchange Commission ("SEC"), and an "outside director" within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended ("Section 162(m)"). The Board of Directors (the "Board") shall appoint the members and the Chairman of the Committee on the recommendation of the Nomination and Governance Committee. Membership on the Committee shall rotate at the Board's discretion. The Board shall fill any vacancies on the Committee and may remove a Committee member from the membership of the Committee at any time without cause.

&nbsp;&nbsp;&nbsp;&nbsp;**3.** **Responsibilities and Duties** 

In carrying out its purpose, the Committee will have the following responsibilities and duties:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Review annually and approve the Company's compensation strategy to ensure that it promotes shareholder interests and supports the Company's strategic and tactical objectives, and that it provides appropriate rewards and incentives for management and employees of the Company, including review of compensation-related risk management.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Review annually and approve corporate goals and objectives relevant to executive compensation and evaluate performance in light of those goals.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Review annually and determine the individual elements of total compensation for the Chief Executive Officer and all other "executive officers" within the meaning of Rule 3b-7 issued by the SEC and "officers" within the meaning of Rule 16a-1(f) issued by the SEC (together, "Officers").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Review and discuss the "Compensation Discussion and Analysis" disclosure prepared pursuant to the requirements of Item 402(b) of Regulation S K (or any successor disclosure item), and based on such review and discussion recommend to the Board whether such "Compensation Discussion and Analysis" disclosure should be included in the Company's annual report on Form 10 K, proxy statement, information statement or similar document.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Communicate in the annual Board Compensation Committee Report to shareholders the disclosures required by Item 407(e)(5) of Regulation S-K (or any successor disclosure item).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. Approve any and all special perquisites, special cash payments and other special compensation and benefit arrangements for the Company's Officers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. Review and recommend compensation for non-employee members of the Board, including but not limited to the following elements: retainer, meeting fees, committee fees, committee chair fees, equity or stock compensation, deferred compensation, benefits and perquisites.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h. With sole and exclusive authority, make and approve equity grants and other discretionary awards under the Company's equity incentive plans to all persons who are Officers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Grant equity awards and other discretionary awards under the Company's equity incentive plans to all other eligible individuals in the Company's service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j. Amend the provisions of the Company's equity incentive plans, to the extent authorized by the Board, and make recommendations to the Board with respect to incentive compensation and equity-based plans.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;k. Approve for submission to the shareholders equity incentive plans or amendments thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;l. Oversee and periodically review the operation of all of the Company's employee benefit plans. Responsibility for day-to-day administration of the plans, including the preparation and filing of all government reports and the preparation and delivery of all required employee materials and communications, will be performed by company personnel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;m. Ensure that incentive compensation plans are administered in a manner consistent with the Company's compensation strategy and the terms of such plan, including but not limited to the following: participation, target annual incentive awards, corporate financial goals, actual awards paid to Officers and qualification to the extent required by Section 162(m).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;n. Review matters related to management performance, compensation and succession planning (including periodic review and approval of Chief Executive Officer and other Officer succession planning) and executive development for executive staff.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o. Approve separation packages and severance benefits for Officers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;p. Exercise, as necessary and appropriate, all of the authority of the Board with respect to the election of corporate officers of the Company during the periods between the regular meetings of the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;q. Have full access to the Company's executives and personnel as necessary to carry out its responsibilities.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;r. Obtain such advice, data or other resources necessary to perform its duties hereunder, and the Committee has the authority to obtain external consultant reports or published salary surveys, to retain an independent compensation consultant, and to retain other professionals to assist in the design, formulation, analysis and implementation of compensation programs for the Company's Officers, other key employees and non-employee members of the Board. If the Committee enlists the services of a consultant to assist in the evaluation of its director or executive compensation program or other matters, the Committee has sole authority to retain and terminate that firm, including sole authority to approve the firm's fees and other retention terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;s. Have responsibility for the review and approval of all reports and summaries of Officer and Director compensation policies and decisions as may be appropriate for operational purposes or as may be required under applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;t. Perform any other activities consistent with this Charter, the Company's Bylaws and governing law as the Committee or the Board deems necessary or appropriate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;u. Review the Committee Charter from time to time and recommend any changes to the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v. Report to the Board on the major items covered at each Committee meeting.

&nbsp;&nbsp;&nbsp;&nbsp;**4.** **Committee Meetings** 

The Committee will meet as often as necessary to carry out its responsibilities. Meetings may be called by the Chairman of the Committee and/or by the management of the Company. Minutes of each meeting will be duly filed in the Company records. Reports of meetings of the Committee will be made to the Board at its next regularly scheduled meeting following the Committee meeting accompanied by any recommendations to the Board approved by the Committee.

The Committee will also meet as and when necessary to act upon any other matters within its jurisdiction under this Charter. A majority of the total number of members of the Committee will constitute a quorum at all Committee meetings. All meetings shall be held subject to and in accordance with the Colorado Business Corporation Act. Minutes will be kept of each meeting of the Committee.

![smlpglogo.jpg](smlpglogo.jpg)- 4

## Exhibit 99.4

**Exhibit 99.4**

**EXHIBIT D**

## Alpha Energy, Inc.

## NOMINATION AND<br> GOVERNANCE COMMITTEE<br> CHARTER

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**NOMINATION AND GOVERNANCE COMMITTEE CHARTER**

&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Purpose** 

The Nomination and Governance Committee (the "Committee") shall oversee, review, and make periodic recommendations concerning the Company's corporate governance policies, and shall recommend candidates for election to the Company's Board of Directors (the "Board").

&nbsp;&nbsp;&nbsp;&nbsp;**2.** **Composition of the Committee** 

The Committee shall be comprised of not less than three directors each of whom shall be an "independent director" as required by the rules of The Nasdaq Stock Market, Inc. ("NASDAQ") and applicable state and federal law, including the rules and regulations of the Securities and Exchange Commission ("SEC"). The Board shall appoint the members and the Chairman of the Committee on the recommendation of the Committee. Membership on the Committee shall rotate at the Board's discretion. The Board shall fill any vacancies on the Committee and may remove a Committee member from the membership of the Committee at any time without cause.

&nbsp;&nbsp;&nbsp;&nbsp;**3.** **Responsibilities and Duties** 

In carrying out the purpose set forth in Section 1 above, the Committee shall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Identify and review candidates for the Board and recommend to the full Board candidates for election to the Board, and from time to time review the process for identifying and evaluating candidates for election to the Board. The Committee may engage consultants or third-party search firms to assist in identifying and evaluating potential nominees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Review from time to time the appropriate skills and characteristics required of Board members, including such factors as business experience, diversity, and personal skills in technology, finance, marketing, international business, financial reporting and other areas that are expected to contribute to an effective Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Establish policies regarding consideration of director candidates recommended by the Company's stockholders and the procedures to be followed by the stockholders that desire to submit such a recommendation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Recommend to the Board the membership of each Board committee (including this Committee) and a Chairperson for each committee. The Committee shall review the qualifications of the members of each committee to ensure that each committee has a membership that meets any applicable criteria of the rules and regulations of the SEC and NASDAQ. There is no policy limiting the service on any committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Periodically review the Company's corporate governance policies, including its Code of Ethics and Business Conduct and recommend to the Board modifications to the policies as appropriate.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Have full access to the Company's executives as necessary to carry out this responsibility.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. Perform any other activities consistent with this Charter, the Company's Bylaws and governing law as the Committee or the Board deems necessary or appropriate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. Review the Committee Charter from time to time for adequacy and recommend any changes to the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. Report to the Board on the major items covered at each Committee meeting.

&nbsp;&nbsp;&nbsp;&nbsp;**4.** **Committee Meetings** 

The Committee will meet periodically as necessary to act upon any matter within its jurisdiction. A majority of the total number of members of the Committee shall constitute a quorum at all Committee meetings. All meetings shall be held subject to and in accordance with the Colorado Business Corporation Act. Minutes shall be kept of each meeting of the Committee.

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## Ex-Filing

**Exhibit 107**

**Calculation of Filing Fee Tables**

**Form S-1**

(Form Type)

**Alpha Energy, Inc.**

(Exact Name of Registrant as Specified in its Charter)

<u>Table 1: Newly Registered Securities and Carry Forward Securities</u>

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Security<br> Type** | **Security<br> Class<br> Title** | **Fee<br> Calculation<br> or carry<br> forward rule<br> Rule** | **Amount<br> Registered** | **Proposed<br> Maximum<br> Offering<br> Price Per<br> Share** | **Maximum<br> Aggregate<br> Offering<br> Price** | **Fee<br> Rate** | **Amount of<br> Registration<br> Fee** |
| Newly Registered Securities | Newly Registered Securities | Newly Registered Securities | Newly Registered Securities | Newly Registered Securities | Newly Registered Securities | Newly Registered Securities | Newly Registered Securities | Newly Registered Securities |
| **Fees to be<br> Paid** | &nbsp;&nbsp; Equity | &nbsp;&nbsp;&nbsp;&nbsp; Common stock, par value $0.001 per share (1)(2)(3) | &nbsp;&nbsp;&nbsp; Rule 457(o) |  |  | &nbsp;&nbsp;&nbsp; $28750000 | &nbsp;&nbsp;&nbsp;&nbsp;0.0001102 | &nbsp;&nbsp; $3168.25 |
| **Fees to be<br> Paid** | &nbsp;&nbsp; Equity | &nbsp;&nbsp;&nbsp;&nbsp; Common stock, par value $0.001 per share (4) | &nbsp;&nbsp;&nbsp; Ruler 457(o) |  |  | &nbsp;&nbsp;&nbsp; $1437500 | &nbsp;&nbsp;&nbsp;&nbsp;0.0001102 | &nbsp;&nbsp; $158.41 |
| **Fees<br> Previously<br> Paid** |  |  |  |  |  |  |  |  |
| Carry Forward Securities | Carry Forward Securities | Carry Forward Securities | Carry Forward Securities | Carry Forward Securities | Carry Forward Securities | Carry Forward Securities | Carry Forward Securities | Carry Forward Securities |
| **Carry<br> Forward<br> Securities** |  |  |  |  |  |  |  |  |
|  | Total Offering Amount | Total Offering Amount | Total Offering Amount | Total Offering Amount |  | &nbsp;&nbsp;&nbsp; $30187500 |  | &nbsp;&nbsp; $3326.251 |
|  | Total Fees Previously Paid | Total Fees Previously Paid | Total Fees Previously Paid | Total Fees Previously Paid |  |  |  | &nbsp;&nbsp; $0 |
|  | Total Fee Offsets | Total Fee Offsets | Total Fee Offsets | Total Fee Offsets |  |  |  | &nbsp;&nbsp; $0 |
|  | Net Fee Due | Net Fee Due | Net Fee Due | Net Fee Due |  |  |  | &nbsp;&nbsp; $3326.25 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Pursuant to Rule 416(a) promulgated under the Securities Act of 1933, the securities being registered hereunder include such indeterminate number of additional securities as may be issued after the date hereof as a result of stock dividends, stock splits, recapitalizations, or other similar transactions effected that results in an increase to the number of outstanding shares of the common stock, as applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Calculated pursuant to Rule 457(o) on the basis of the maximum aggregate offering price of all the securities to be registered.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Includes shares of common stock representing 15% of the number of shares of common stock offered to the public that the underwriters have the option to purchase to cover over-allotments, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Represents up to 5% of the value of the Maximum Aggregate Offering Price solely to cover representative warrants.