Document:

Exhibit 10.24

PURCHASE AGREEMENT

by and among

VANGUARD
NATURAL RESOURCES, LLC,

MAJEED S. NAMI

and

LEHMAN BROTHERS
MLP OPPORTUNITY FUND L.P.,

THIRD POINT
PARTNERS LP,

THIRD POINT
PARTNERS QUALIFIED LP

and

BLRTQS Partners

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE I DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II PURCHASE AND SALE

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Purchase

  	
   

  	
  6

  
	
  2.2

  	
   

  	
  Closing

  	
   

  	
  6

  
	
  2.3

  	
   

  	
  Deliveries

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND WARRANTIES

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Representations and Warranties of the Company
  Parties

  	
   

  	
  7

  
	
  3.2

  	
   

  	
  Representations and Warranties of Nami

  	
   

  	
  15

  
	
  3.3

  	
   

  	
  Representations and Warranties of Purchasers

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV OTHER AGREEMENTS OF THE PARTIES

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Transfer Restrictions

  	
   

  	
  24

  
	
  4.2

  	
   

  	
  Integration

  	
   

  	
  25

  
	
  4.3

  	
   

  	
  Audited Financial Statements

  	
   

  	
  25

  
	
  4.4

  	
   

  	
  Consents

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V INDEMNIFICATION

  	
   

  	
  25

  
	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Survival

  	
   

  	
  25

  
	
  5.2

  	
   

  	
  Indemnification

  	
   

  	
  26

  
	
  5.3

  	
   

  	
  Indemnification Cap

  	
   

  	
  28

  
	
  5.4

  	
   

  	
  Exclusive Remedy

  	
   

  	
  28

  
	
  5.5

  	
   

  	
  Limitation on Damages

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI MISCELLANEOUS

  	
   

  	
  28

  
	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Entire Agreement

  	
   

  	
  28

  
	
  6.2

  	
   

  	
  Notices

  	
   

  	
  28

  
	
  6.3

  	
   

  	
  Additional Information

  	
   

  	
  29

  
	
  6.4

  	
   

  	
  Amendments; Waivers

  	
   

  	
  29

  
	
  6.5

  	
   

  	
  Equal Treatment of Purchasers

  	
   

  	
  29

  
	
  6.6

  	
   

  	
  Construction

  	
   

  	
  30

  
	
  6.7

  	
   

  	
  Successors and Assigns

  	
   

  	
  30

  
	
  6.8

  	
   

  	
  No Third-Party Beneficiaries

  	
   

  	
  30

  
	
  6.9

  	
   

  	
  Governing Law

  	
   

  	
  30

  
	
  6.10

  	
   

  	
  Execution

  	
   

  	
  30

  
	
  6.11

  	
   

  	
  Severability

  	
   

  	
  30

  
	
  6.12

  	
   

  	
  Expenses

  	
   

  	
  30

  
	
  6.13

  	
   

  	
  Remedies

  	
   

  	
  30

  
	
  6.14

  	
   

  	
  Independent Nature of Purchaser’s Obligations and
  Rights

  	
   

  	
  31

  

 

 i
 

 

	
  Schedules and Exhibits

  
	
   

  
	
  Schedule 1 — List of Purchasers and Commitment
  Amounts

  
	
   

  
	
  Schedule 3.1(k) — Issuance of the Purchased
  Securities

  
	
   

  
	
  Schedule 3.1(r) — Future Assignments

  
	
   

  
	
  Schedule 3.1(w) — Changes

  
	
   

  
	
  Schedule 3.1(y) — Related Party Transactions

  
	
   

  
	
  Schedule 3.1(z) — No Litigation

  
	
   

  
	
  Schedule 3.1(bb) — No Side Agreements

  
	
   

  
	
  Schedule 3.1(cc) — Taxes

  
	
   

  
	
  Schedule 3.1(hh) — Material Contracts

  
	
   

  
	
  Exhibit A — Form of Vinson & Elkins L.L.P.
  Legal Opinion

  
	
   

  
	
  Exhibit A-1 — Form of Legal Opinion regarding
  Qualifying Income

  
	
   

  
	
  Exhibit A-2 — Form of Wyatt, Tarrant & Combs,
  LLP Legal Opinion

  
	
   

  
	
  Exhibit B — Registration Rights Agreement

  
	
   

  
	
  Exhibit C — Company LLC Agreement

  
	
   

  
	
  Exhibit D — Financial Statements

  

 

 ii

PURCHASE AGREEMENT

This
Purchase Agreement (this “Agreement”) is dated as of April 18, 2007 by
and among VANGUARD NATURAL RESOURCES, LLC, a Delaware limited liability company
(the “Company”), Majeed S. Nami (“Nami”) and LEHMAN BROTHERS MLP
OPPORTUNITY FUND L.P., a Delaware limited partnership, THIRD POINT PARTNERS LP,
a Delaware limited partnership, THIRD POINT PARTNERS QUALIFIED LP, a Delaware
limited partnership, and BLRTQS Partners, a general partnership (individually,
a “Purchaser” and collectively, the “Purchasers”).

WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated
under the Securities Act, the Company desires to issue and sell to each Purchaser,
and each Purchaser desires to purchase from the Company, certain securities of
the Company as more fully described in this Agreement; and

WHEREAS,
it is a condition to this Agreement that the Company provide Purchasers with
certain registration rights as set forth in the Registration Rights Agreement.

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 each Purchaser,
severally and not jointly, agree as follows:

ARTICLE I

DEFINITIONS

1.1           Definitions.  The following terms have the meanings
indicated:

“Affiliate” means,
with respect to a specified Person, any other Person, directly or indirectly
controlling, controlled by or under direct or indirect common control with such
specified Person.  For purposes of this
definition, “control” (including, with correlative meanings, “controlling,” “controlled
by” and “under common control with”) means the power to direct or cause the
direction of the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.

“Agreement” has
the meaning set forth in the preamble hereto.

“Assignment Agreements”
means the contribution agreements and the assignment and bill of sale
agreements entered into to effect the transactions set forth in Schedule 3.1(r)
and in Section 2 of Schedule 3.1(y) hereto.

“Business Day”
means any day other than a Saturday, Sunday, or a legal holiday for commercial
banks in New York, New York.

“Class B Units”
has the meaning assigned to such term in the Company LLC Agreement.

“Closing” means
the closing of the purchase and sale of the Purchased Securities pursuant to
Section 2.2.

“Closing Date” has
the meaning set forth in Section 2.2 of this Agreement.

“Commission” means
the Securities and Exchange Commission.

“Commitment Amount”
means the amount set forth opposite each Purchaser’s name on Schedule 1
to this Agreement, which shall be the product of the number of Common Units
purchased by such Purchaser times the Per Unit Purchase Price.

“Common Units” has
the meaning assigned to such term in the Company LLC Agreement.

“Company” has the
meaning set forth in the preamble hereto.

“Company LLC Agreement”
means that Amended and Restated Limited Liability Company LLC Agreement of the
Company, dated April 18, 2007, in substantially the form attached hereto as Exhibit C.

“Company Parties”
means the Company, the Operating Company and the Operating Subsidiaries.

“Credit Agreement”
means the Credit Agreement dated as of January 3, 2007 among Nami Holding
Company, LLC, Citibank, N.A. as Administrative Agent, various lenders named
therein, Citibank, N.A. as Co-Lead Arranger, Sole Bookrunner and Co-Syndication
Agent and BNP Paribas as Co-Lead Arranger and Co-Syndication Agent.

“Delaware LLC Act”
means the Delaware Limited Liability Company Act, as amended from time to time.

“Environmental Laws
and Regulations” means all laws, rules, regulations, ordinances, orders or
other legally enforceable requirements of any governmental authority relating
to pollution, nuisance, the environment, natural resources or the protection of
public heath and safety including, without limitation, (i) the Federal Clean
Air Act, 42 U.S.C. §§ 7401 et seq.; (ii) the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. §§ 9601 et seq.; (iii) the
Federal Emergency Planning and Community Right-to-Know Act, 42 U.S.C. §§ 1101
et seq.; (iv) the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
§§ 136 et seq.; (v) the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251
et seq.; (vi) the Solid Waste Disposal Act, 42 U.S.C. §§ 6901 et seq.; (vii)
the Safe Water Drinking Act, 42 U.S.C. §§ 300f et seq.; (viii) the Toxic
Substances Control Act, 15 U.S.C. §§ 2601 et seq.; (ix) emissions, discharges,
releases, or threatened releases of any Hazardous Material; and (x) the
manufacture, processing, distribution, use, coverage, disposal, transportation,
storage or handling of any Hazardous Material.

“Exchange Act”
means the Securities Exchange Act of 1934, as amended.

 2
 

“Financial Models”
means the pro forma and historical financial information contained in those
certain materials titled “Financial Information”, a copy of which was provided
to the Purchasers on March 29, 2007.

“Financial Statements”
means consolidated financial statements of the Operating Company for the year
ended December 31, 2006.

“Hazardous Materials”
means any hazardous, infectious or toxic substance, chemical, pollutant,
contaminant, emission or waste which is regulated or requires removal,
remediation or reporting under any Environmental Laws and Regulations or by any
local, state, federal or foreign authority. 
Hazardous Materials include, without limitation, anything which is:  (i) defined as a “pollutant” pursuant to 33
U.S.C. § 1362(6); (ii) defined as a “hazardous waste” pursuant to 42 U.S.C. §
6921; (iii) defined as a “regulated substance” pursuant to 42 U.S.C. § 6991;
(iv) defined as a “hazardous substance” pursuant to 42 U.S.C. § 9601(14); (v)
defined as a “pollutant or contaminant” pursuant to 42 U.S.C. § 9601(33); (vi)
petroleum; (vii) asbestos; and (viii) polychlorinated biphenyl.

“Hydrocarbon Interests”
means all rights, titles, interests and estates now owned or hereafter acquired
in and to oil and gas leases, oil, gas and mineral leases (including
subleases), oil, gas and casinghead gas leases, or other liquid or gaseous
hydrocarbon leases, mineral fee or lease interests, other oil, gas and mineral
leasehold fee or term interests, farm outs, overriding royalty and royalty
interests, net profits interests, net revenue interests, carried interests, oil
payments, production payment interests and similar mineral interests, including
any reserved, reversionary or residual interest of whatever nature.

“Indemnified Party”
has the meaning set forth in Section 5.2(d) of this Agreement.

“Indemnifying Party”
has the meaning set forth in Section 5.2(d) of this Agreement.

“IPO” means the
initial public offering of Common Units by the Company that results in the
Common Units being listed for trading on the New York Stock Exchange or the
Nasdaq Global Market or any affiliate of the New York Stock Exchange or the
Nasdaq Global Market.

“Losses” means any
and all losses, claims, damages, liabilities, settlement costs and expenses,
including, without limitation, reasonable attorneys’ fees.

“Material Adverse
Effect” has the meaning set forth in Section 3.1(a) of this Agreement.

“Nami” has the
meaning set forth in the preamble hereto.

“Notice” has the
meaning set forth in Section 6.2 of this Agreement.

“Oil and Gas
Properties” means all of the Company Parties’ Hydrocarbon Interests;
personal property and/or real property now or hereafter pooled or unitized with
Hydrocarbon Interests; currently existing or future unitization, pooling
agreements and declarations of pooled units and the units created thereby
(including all units created under orders, 

 3
 

regulations and rules of any governmental body having
jurisdiction) which may affect all or any portion of the Hydrocarbon Interests;
pipelines, gathering lines, compression facilities, tanks and processing
plants; oil wells, gas wells, water wells, injection wells, platforms, spars or
other offshore facilities, casings, rods, tubing, pumping units and engines,
Christmas trees, derricks, separators, gun barrels, flow lines, gas systems
(for gathering, dehydration, treating and compression), and water systems (for
treating, disposal and injection); interests held in royalty trusts whether
currently existing or hereafter created; hydrocarbons in and under and which
may be produced, saved, processed or attributable to the Hydrocarbon Interests,
the lands covered thereby and all hydrocarbons in pipelines, gathering lines,
tanks and processing plants and all rents, issues, profits, proceeds, products,
revenues and other incomes from or attributable to the Hydrocarbon Interests;
tenements, hereditaments, appurtenances and personal property and/or real property
in any way appertaining, belonging, affixed or incidental to the Hydrocarbon
Interests, and all rights, titles, interests and estates described or referred
to above, including any and all real property, now owned or hereafter acquired,
used or held for use in connection with the operating, working or development
of any of such Hydrocarbon Interests or personal property and/or real property
and including any and all surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements, accessions
and attachments to any and all of the foregoing.

“Operating Company”
means Vanguard Natural Gas, LLC (formerly known as Nami Holding Company, LLC),
a Kentucky limited liability company.

“Operating Company LLC
Agreement” means that certain Amended and Restated Operating Agreement of
the Operating Company, dated December 26, 2006.

“Operating
Subsidiaries” means Trust Energy Company, LLC, a Kentucky limited liability
company and Ariana Energy LLC, a Tennessee limited liability company.

“Patriot Act” has
the meaning set forth in Section 3.3(p) of this Agreement.

“Per Unit Purchase
Price” shall mean $18.00.

“Person” means any
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or any court or other federal,
state, local or other governmental authority or other entity of any kind.

“PowerPoint
Presentation” means the PowerPoint presentation titled “Investor Meetings”,
a copy of which was provided to the Purchasers on March 29, 2007.

“Proceeding” means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.

“Prohibited Investor”
has the meaning set forth in Section 3.3(p) of this Agreement.

“Purchased Securities”
has the meaning set forth in Section 2.1 of this Agreement.

 4
 

“Purchaser” has
the meaning set forth in the preamble to this Agreement.

“Registration Rights
Agreement” means that certain Registration Rights Agreement, dated as of
April 18, 2007, by and among the Company and the Purchasers in substantially
the form attached hereto as Exhibit B.

“Related Party
Agreements” means the agreements identified in Sections 1 and 3 of Schedule
3.1(y) hereto.

“Release” means
the active or passive spilling, emitting, leaking, pumping, pouring, emptying,
discharging, injecting, escaping, leaching, dumping or disposing into the
indoor or outdoor environment.

“Reserve Report”
means the Reserve Report prepared by Netherland Sewell & Associates, Inc.
covering the Company’s natural gas and crude oil reserve information as of
December 31, 2006.

“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such rules 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.

“Securities Act”
means the Securities Act of 1933, as amended from time to time, and the rules
and regulations of the Commission promulgated thereunder.

“Subsidiary”
means, with respect to any Person, (a) a corporation of which more than 50% of
the voting power of shares or member interests entitled (without regard to the
occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the
date of determination, by such Person, by one or more Subsidiaries of such
Person, or a combination thereof, (b) a partnership (whether general or
limited) or limited liability company in which such Person or a Subsidiary of
such Person is, at the date of determination, a general or limited partner of
such partnership or member of such limited liability company, but only if more
than 50% of the Company or member interests of such partnership or limited
liability company (considering all of the Company or member interests of the
Company or limited liability company as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person
(other than a corporation, partnership or limited liability company) in which
such Person, one or more Subsidiaries of such Person, or a combination thereof,
directly or indirectly, at the date of determination, has (i) at least a
majority ownership interest or (ii) the power to elect or direct the election
of a majority of the directors or other governing body of such Person.

“Total Commitment
Amount” means $41,220,000.

“Transaction Documents”
means this Agreement, the Assignment Agreements, the Company LLC Agreement and
the Registration Rights Agreement, the Related Party

 5
 

Agreements and any other agreements executed in
connection with the transactions contemplated hereunder.

“Transactions”
means the consummation of the transactions contemplated by the Transaction
Documents.

“Transfer Agent”
the meaning set forth in the Company LLC Agreement.

“VNR Holdings”
means VNR Holdings, LLC, a Delaware limited liability company.

ARTICLE II

PURCHASE AND SALE

2.1           Purchase.  Subject to the terms and conditions hereof,
each Purchaser, severally and not jointly, hereby agrees to purchase from the
Company and the Company hereby agrees to issue and sell to each Purchaser, such
number of Common Units as is set forth under the column entitled “Common Units”
on Schedule 1 of this Agreement (the “Purchased Securities”)
on the terms and subject to the conditions provided for herein.

2.2           Closing.  The consummation of the transactions
contemplated hereby (the “Closing”) shall take place at the offices of
Vinson & Elkins L.L.P., 2500 First City Tower, 1001 Fannin,
Houston, Texas 77002 on April 18, 2007 (the “Closing Date”).

2.3           Deliveries.

(a)           At the Closing, subject to the terms
and conditions hereof, the Company will deliver, or cause to be delivered, to
each Purchaser:

(i)            the Purchased Securities by delivery
of certificates evidencing such Purchased Securities at the Closing meeting the
requirements of the Company LLC Agreement, all free and clear of any liens,
encumbrances, security interests, equities, charges or claims of any other
Person or other restrictions whatsoever (other than those arising under the
Company LLC Agreement or state or federal securities laws);

(ii)           Certificates of the Secretary of
State of the State of Delaware and the State of Kentucky, each dated as of a
recent date, that each of the Company and the Operating Company is in good
standing or existence, as the case may be;

(iii)          Certificates of the Secretary of State
of the State of Kentucky and the State of Tennessee, each dated as of a recent
date, that the applicable Operating Subsidiary is in good standing or
existence, as the case may be;

(iv)          An opinion addressed to the Purchasers
from Vinson & Elkins L.L.P., dated as of the Closing, in the form and
substance attached hereto as Exhibit A;

(v)           A qualifying income opinion addressed
to the Company from Vinson & Elkins L.L.P. dated as of the Closing, in the
form and substance attached hereto as Exhibit A-1;

 6
 

(vi)          An opinion addressed to the Purchasers
from Wyatt, Tarrant & Combs, LLP, dated as of the Closing, in the form and
substance attached hereto as Exhibit A-2;

(vii)         The Registration Rights Agreement,
which shall have been duly executed by the Company; and

(b)           At the Closing, subject to the terms
and conditions hereof, each Purchaser will deliver, or cause to be delivered to
the Company:

(i)            The Commitment Amount in United States
dollars in immediately available funds, by wire transfer to an account
designated in writing by the Company prior to the Closing;

(ii)           The Registration Rights Agreement,
which shall have been duly executed by such Purchaser;

ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.1           Representations and Warranties of
the Company Parties.  The Company
hereby represents and warrants to each Purchaser that, as of Closing, after
giving effect to transactions contemplated by this Agreement:

(a)           Company and VNR Holdings Formation.  Each of the Company and VNR Holdings has been
duly formed and is validly existing as a limited liability company under the
laws of the state of Delaware, with limited liability company power and
authority to own or lease its properties and to conduct its business in all
material respects as currently conducted, and is duly qualified or registered
as a foreign limited liability company for the transaction of business and is
in good standing under the laws of each jurisdiction in which it owns or leases
property, or conducts any business, so as to require such qualification or
registration (except where the failure to be so qualified or registered would
not, singly or in the aggregate, reasonably be expected to have a material
adverse effect upon the business, prospects, financial condition or results of
operations of the Company Parties, taken as a whole, or subject the Company
Parties or the holders of Common Units to any material liability (a “Material
Adverse Effect”)).

(b)           Operating Company Formation.  The Operating Company has been duly formed
and is validly existing as a limited liability company in good standing under
the laws of the state of Kentucky, with limited liability company power and
authority to own or lease its properties, to conduct its business, in each case
in all material respects as currently conducted, and is duly qualified or
registered as a foreign limited liability company for the transaction of
business and is in good standing under the laws of each jurisdiction in which it
owns or leases properties, or conducts any business, so as to require such
qualification (except where the failure to be so qualified would not, singly or
in the aggregate, reasonably be expected to have a Material Adverse Effect).

 7
 

(c)           Operating Subsidiary Formation.  Each of the Operating Subsidiaries has been
duly formed and is validly existing in each case in good standing as a limited
liability company under the applicable laws of the state of its formation, with
all necessary limited liability company power and authority to own or lease its
properties and to conduct its business, in each case in all material respects
as currently conducted.  Each of the
Operating Subsidiaries is duly registered or qualified as a foreign limited
liability company for the transaction of business and is in good standing under
the laws of each jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification (except where the
failure to be so qualified would not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect).

(d)           Ownership of the Operating Company
and VNR Holdings.  The Company owns
100% of the member interest in each of the Operating Company and VNR Holdings;
such member interests have been duly authorized and validly issued in
accordance with the applicable limited liability agreements and are fully paid
(to the extent required under the applicable limited liability agreement) and
nonassessable (except as such nonassessability may be affected by KRS 275.230
or Section 18-607 of the Delaware LLC Act, as applicable and otherwise by
matters contained in the applicable limited liability agreement).  The Company owns such member interests free
and clear of all liens, encumbrances (except for restrictions on
transferability as contained in the applicable limited liability agreement),
security interests, charges or claims (except for liens created pursuant to the
Credit Agreement).

(e)           Ownership of the Operating
Subsidiaries.  The Operating Company
owns 100% of the member interest in each of the Operating Subsidiaries; such
member interests have been duly authorized and validly issued in accordance
with the Operating Subsidiaries’ limited liability company agreements and are
fully paid (to the extent required under the Operating Subsidiaries’ limited
liability company agreement) and nonassessable (except as such nonassessability
may be affected by KRS 275.230 and otherwise by matters contained in the
Operating Subsidiaries’ limited liability company agreements).  The Operating Company owns such member
interests free and clear of all liens, encumbrances (except for restrictions on
transferability as contained in the Operating Subsidiaries’ limited liability
company agreements), security interests, charges or claims (except for liens
created pursuant to the Credit Agreement).

(f)            Capitalization.  Immediately after Closing, the only issued
and outstanding limited liability company interests of the Company will consist
of 5,540,000  Common Units and 365,000  Class B Units.  All outstanding Common Units and Class B
Units have been duly authorized and are validly issued in accordance with the
Company LLC Agreement and are fully paid (to the extent required under the
Company LLC Agreement) and nonassessable (except as such nonassessability may
be affected by Section 18-607 of the Delaware LLC Act and otherwise by matters
described in the Company LLC Agreement).

(g)           No Other Subsidiaries.  Other than (i) the Company’s ownership of
100% of the Operating Company and VNR Holdings and (ii) the Operating Company’s
ownership of 100% of each of the Operating Subsidiaries, the Company does not
own, directly or 

 8
 

indirectly, any equity or debt securities of any
corporation, partnership, limited liability company, joint venture, association
or other entity.

(h)           Authorization; Enforcement.  The Company has the requisite power and
authority to enter into and to consummate the Transactions in the manner
contemplated by the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. 
The execution and delivery of each of the Transaction Documents by the
Company and the consummation by the Company of the Transactions have been duly
authorized by all necessary action on the part of the Company or any of its
members and no further consent or action is required by the Company in
connection therewith.  Each of the
Transaction Documents has been (or upon delivery will be) duly executed by the
Company and each Transaction Document constitutes, or 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 as may be limited by:

(i)            applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other laws of general
application relating to or affecting the enforcement of creditors rights
generally and the application of equitable principles, and

(ii)           applicable laws and public policy
with respect to the indemnity, contribution and exoneration provisions
contained in the Transaction Documents.

(i)            No Violation.  The offering, issuance and sale by the
Company of the Purchased Securities being delivered at the Closing Date, the
execution, delivery and performance of the Transaction Documents by the Company
Parties that are party thereto and the consummation by the Company Parties that
are party thereto of the Transactions do not and will not:

(i)            violate any provision of the
certificate of formation, partnership agreement, limited liability company
agreement, or other organizational or charter documents of any of the Company
Parties;

(ii)           constitute a default (or an event
that 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 (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a debt or other
obligation of the Company Parties) to which the Company Party is a party or by
which any property or asset of the Company Parties is bound or affected, except
to the extent that such default, termination, amendment, acceleration or
cancellation right would not, singly or in the aggregate, reasonably be expected
to have a Material Adverse Effect;

(iii)          result in a violation of any law,
statute, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which any of the Company
Parties is subject (including federal and state securities laws and
regulations) or by which any property or asset of the Company 

 9
 

Parties is bound or affected, except to the extent
that such violation would not, singly or in the aggregate,  reasonably be expected to have a Material
Adverse Effect; or

(iv)          result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of any of the
Company Parties (other than liens created pursuant to the Credit Agreement or
arising by, through or under the Company LLC Agreement), which liens would
reasonably be expected to have a Material Adverse Effect.

(j)            Restrictions on Distributions.  Except for the Credit Agreement, none of the
Company Parties has entered into any agreement that restricts or prohibits its
ability to pay cash distributions.

(k)           Issuance of the Purchased
Securities.  The Purchased Securities
are duly authorized and, when issued and paid for in accordance with this
Agreement, will be duly and validly issued, fully paid and nonassessable
(except as such nonassessability may be affected by Section 18-607 of the
Delaware LLC Act and otherwise by matters described in the Company LLC
Agreement), free and clear of all liens and shall not be subject to preemptive
or similar rights.  Except as provided in
Schedule 3.1(k), there are no outstanding options, warrants, scrip
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or any right to subscribe for or acquire, any
equity securities of any of the Company Parties, or contracts or commitments by
which the Company Parties are bound to issue additional equity securities of
any of the Company Parties, or securities or rights convertible or exchangeable
into equity securities of any of the Company Parties nor is there any
restriction upon the voting or transfer of any equity securities of any of the
Company Parties.

(l)            Financial Statements.  The Company has made available to the
Purchasers the Financial Statements.  The
Financial Statements were prepared in accordance with generally accepted
accounting principles used in the United States (“GAAP”), consistently
applied (except as disclosed in the footnotes thereto), and fairly present, in
all material respects, the consolidated financial position and results of
operations of the Operating Company as of the dates thereof and for the periods
covered thereby.

(m)          Permits.  Each of the Company Parties possesses all
certificates, authorities or permits issued by the appropriate local, state or
federal regulatory agencies or bodies necessary to conduct the business
currently conducted by it, except for such certificates, authorizations or
permits which, (i) are of the type that are to be obtained in the ordinary
course of business and the Company Parties reasonably believe will be obtained,
or (ii) if not obtained, would not, singly or in the aggregate,  reasonably be expected to have a Material
Adverse Effect.  None of the Company
Parties has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which would
reasonably be expected to have a Material Adverse Effect.  The continuation, validity and effectiveness
of all such certificates, authorizations and permits will not be adversely
affected by the transactions contemplated by this Agreement or the other
Transaction Documents.

 10
 

(n)           Reserve Engineer.  Netherland Sewell and Associates, Inc. (the “Reserve
Engineer”) is the Company’s independent reserve engineer.  No information has come to the attention of
the Company that could reasonably be expected to cause the Reserve Engineer to
withdraw its Reserve Report.

(o)           Information Underlying Reserve
Report.  The information underlying
the estimates of the Company’s proved reserves that was supplied to the Reserve
Engineer for the purposes of preparing the Reserve Report and estimates of the
proved reserves of the Company in the Reserve Report, including, production,
costs of operation, and, to the knowledge of the Company, future operations and
sales of production, was true and correct in all material respects on the dates
such information was provided, and such information was supplied and was
prepared in accordance with customary industry practices.  Other than normal production of the reserves,
product price fluctuations, and fluctuations of demand for such products, and
except as disclosed in the Reserve Report, the Company is not aware of any
facts or circumstances that would result in a materially adverse change in the
reserves in the aggregate, or the aggregate present value of the future net
cash flows therefrom, as reflected in the Reserve Report.

(p)           Title to Assets.  Except for such failures that would not,
singly or in the aggregate, reasonably be expected to have a Material Adverse
Effect:

(i)            Each of the Company Parties has
(A) legal, valid and defensible title to the interests in Oil and Gas
Properties supporting the estimates of its net proved reserves contained in the
Reserve Report, (B) good and marketable title in fee simple to all real
property other than Oil and Gas Properties covered by clause (A), and (C)
good and marketable title to all personal property owned by them, in each case
free and clear of all liens except those arising under the Credit Agreement or
those that do not materially affect the value of the property of the Company
Parties, taken as a whole, and do not materially interfere with the use made
and proposed to be made of such property by any of the Company Parties.

(ii)           With respect to all real property and
buildings held under lease by any of the Company Parties (A) such leases are in
full force and effect and constitute valid and binding obligations of the
Company Parties thereto; (B) there have not been and there currently are not
any defaults by any of the Company Parties thereunder except for such defaults
as would not, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect; (C) to the knowledge of the Company Parties, no event
has occurred, which (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute a default
thereunder by any of the Company Parties entitling the lessor to terminate the
lease; and (D) the continuation, validity and effectiveness of all such leases
under the current rentals and other current terms thereof will not be adversely
affected by the transactions contemplated by this Agreement or the other
Transaction Documents.

 11
 

(q)           Environmental.  Except as would not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect:

(i)            The operations and activities of
each of the Company Parties is in compliance with all Environmental Laws and
Regulations.

(ii)           Each of the Company Parties has
obtained and is in compliance with all requirements, permits, licenses and
other authorizations which are required with respect to its operations, under
all Environmental Laws and Regulations.

(iii)          There is no civil, criminal,
administrative or other action, suit, demand, claim, hearing, notice of
violation, proceeding, investigation, notice or demand pending, received, or,
to the knowledge of the Company Parties, threatened against the Company Parties
relating in any way to any Environmental Laws and Regulations, which has not
been abated.

(iv)          No real property currently owned,
leased or operated by the Company Parties has been placed on the National
Priorities List of hazardous waste sites by the U.S. Environmental Protection
Agency and to the knowledge of the Company Parties, no real properties
previously owned, leased or operated by the Company Parties is currently
identified on this list.

(v)           No underground tanks exist or, to the
knowledge of the Company Parties, have existed on any real property now or
previously owned, leased, operated or utilized by the Company Parties or their
predecessors.

(vi)          No Hazardous Materials have been
Released at, on, under or from any property currently owned operated or to the
knowledge of the Company Parties, previously owned or operated by the Company
Parties in violation of Environmental Laws and Regulations or in a manner that
could give rise to any liability under Environmental Laws and Regulations.

(r)            No Consents.  No consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency or
body having jurisdiction over the Company Parties or any of their respective
properties is required for the issuance and sale of the Purchased Securities by
the Company or for the consummation by the Company of the Transactions, except
in each case for such consents, approvals, authorizations, orders,
registrations or qualifications (i) as have been obtained, (ii) as
may be required under state securities or Blue Sky laws in connection with the
purchase of the Purchased Securities, (iii) the failure of which to obtain
would not, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect or (iv) that will be obtained to effect the transfers
contemplated by the agreements set forth on Schedule 3.1(r).

(s)           No Default.  None of the Company Parties (i) is in
violation of its certificate of limited partnership, certificate of formation,
partnership agreement or other organizational or charter documents, (ii) is
in default and no event has occurred 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 (with or without notice,
lapse of time or both) of, 

 12
 

any agreement, credit facility, debt or other
instrument (evidencing a debt or other obligation of the Company Parties) to
which a Company Party is a party or by which any property or asset of the
Company Parties is bound or affected which default would reasonably be expected
to have a Material Adverse Effect, or (iii) is in violation of any law,
statute, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which any of the Company
Parties is subject (including, without limitation, federal and state securities
laws and regulations), or by which any property or asset of the Company Parties
is bound or affected, which violation would reasonably be expected to have a
Material Adverse Effect.  To the
knowledge of the Company, no third party to any agreement, credit facility,
debt or other instrument (evidencing a debt or other obligation of the Company
Parties) to which any of the Company Parties is a party or by which any of them
is bound or to which any of their properties is subject, is in default under
any such agreement, which default would reasonably be expected to have a
Material Adverse Effect.

(t)            Certain Fees.  No brokerage or finder’s fees or commissions
are or will be payable by the Company to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other Person
with respect to the offer, sale and issuance of the Purchased Securities, and
the Company has not taken any action that could cause the Purchasers to be
liable for any such fees or commissions.

(u)           Private Placement.  Assuming the accuracy of the representations
and warranties of the Purchasers contained in this Agreement, the offer, sale
and issuance of the Purchased Securities to the Purchasers are exempt from the
registration requirements of the Securities Act, and the securities laws of any
state having jurisdiction with respect thereto and none of the Company Parties
has taken any action that would cause the loss of such exemption.

(v)           Registration Rights.  Except for registration rights granted
(i) pursuant to the Registration Rights Agreement or (ii) pursuant to
the Company LLC Agreement, the Company has not granted or agreed to grant to
any Person any rights (including “piggy-back” registration rights) to have any
Common Units or other securities of any of the Company Parties registered with
the Commission.

(w)          Absence of Changes.  Except as disclosed on Schedule 3.1(w),
since December 31, 2006, (i) none of the Company Parties has incurred any
liability or obligation, indirect, direct or contingent (including off-balance
sheet obligations), or entered into any transactions, not in the ordinary
course of business, that, singly or in the aggregate, is material to the
Company Parties, taken as a whole, (ii) except as a result of this
offering, there has not been any material change in the capitalization, or
material increase in the short-term debt or long-term debt, of the Company
Parties, taken as a whole, and (iii) there has not been any material
adverse change, or any development involving or which may reasonably be
expected to involve, singly or in the aggregate, a prospective material adverse
change in the business, prospects, financial condition or results of operations
of the Company Parties, taken as a whole.

 13
 

(x)            Insurance.  The Company Parties maintain insurance with
insurers of recognized financial responsibility covering their properties,
operations, personnel and businesses against such losses and risks and in such
amounts as are reasonably adequate to protect them and in the businesses in
which the Company Parties are engaged. 
All such insurance is outstanding and duly in force on the date hereof.

(y)           Transactions With Affiliates and
Employees.  Except as described on Schedule 3.1(y),
none of the officers or directors of the Company and, to the knowledge of the
Company, none of the employees of the Company Parties is a party to any
transaction with any of the Company Parties (other than for services as
employees, officers and 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 officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director or any such employee has a
substantial interest or is an officer, director, trustee or partner, in each
case that would be required to be described in a registration statement on Form
S-1 filed with the Commission under the Securities Act.  There are no outstanding loans, advances
(except normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by any Company Party to or for the
benefit of any of the officers or directors of any Company Party or their
respective family members.

(z)            No Litigation.  Except as described on Schedule 3.1(z), there
are no legal or governmental proceedings pending or, to the knowledge of the
Company, threatened against the Company Parties to which any property of any of
them is subject that would reasonably be expected to have a Material Adverse
Effect.

(aa)         Investment Company.

None of the Company Parties is now, and after the sale
of the Purchased Securities and the application of the net proceeds from such
sale will be, an “investment company” or a company “controlled by” an “investment
company” within the meaning of the Investment Company Act of 1940, as amended,
except that the Company does not represent or warrant as to the Company Parties
being “controlled by” an “investment company” with respect to the Purchasers.

(bb)         No Side Agreement.  Except as described on Schedule 3.1(bb),
there are no other agreements by, between or among the Company Parties or their
Affiliates, on the one hand, and any Purchaser or its Affiliates, on the other
hand, with respect to the transactions contemplated hereby, nor have any
promises or inducements been made between or among such parties with respect to
future transactions.

(cc)         Taxes.  Except as would not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect and except
as set forth on Schedule 3.1(cc): (i) the Company Parties have, in
respect of their business, filed all tax returns required to be filed; (ii) to
the knowledge of the Company, such tax returns are true, correct and complete;
(iii) the Company Parties have paid in full all taxes shown to be due on such
tax returns; and (iv) none of the Company Parties have received any written notice
of deficiency or assessment from any taxing authority with respect to
liabilities for taxes of the Company, which have not been fully paid or finally
settled, unless being contested in good faith through 

 14
 

appropriate proceedings and for which adequate reserves
are presented on the Financial Statements.

(dd)         Qualifying Income.  The assets and businesses of the Company
Parties currently meet the gross income requirements of Section 7704
(c)(2) of the Internal Revenue Code of 1986, as amended, and are expected to
continue to meet such gross income requirements for the taxable year ended
December 31, 2007.

(ee)         EXCEPT AS EXPRESSLY SET FORTH IN THIS
SECTION 3.1, NEITHER THE COMPANY NOR ANY OF ITS AFFILIATES, NOR ANY OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, MANAGERS, MEMBERS OR EMPLOYEES MAKES ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT
OF THE COMPANY OR ITS SUBSIDIARIES, OR ANY OF THEIR RESPECTIVE ASSETS,
LIABILITIES OR OPERATIONS.

(ff)           Accounting Firm.  UHY LLP is an independent registered public
accounting firm with respect to the Company Parties.

(gg)         No Labor Dispute.  No labor dispute with the employees of any of
the Company Parties exists or, to the knowledge of the Company, is imminent or
threatened that would, singly or in the aggregate, reasonably expected to have
a Material Adverse Effect.

(hh)         Material Contracts.  True and complete copies of all material
contracts and other agreements (and all written amendments or other
modifications thereto) set forth on Schedule 3.1(hh) have been furnished
or made available to the Purchasers. 
Except as would not, singly or in the aggregate, reasonably be expected
to have a Material Adverse Effect: (i) all of such material contracts and other
agreements are valid, subsisting, in full force and effect, binding upon the
Company or its Subsidiaries party thereto, as applicable, and, to the knowledge
of the Company, binding upon the other parties thereto in accordance with their
terms; (ii) the Company or its Subsidiaries party thereto is not in default
under any of them, nor, to the knowledge of the Company, is any other party to
any such contract or other agreement in default thereunder; and (iii) to the
knowledge of the Company no event has occurred that with notice or lapse of time
or both would constitute a default by the Company or its Subsidiaries party
thereto thereunder.

(ii)           Disclosure.  The Financial Models and the PowerPoint
Presentation were prepared in good faith with a reasonable basis for the
information contained therein.

3.2           Representations and Warranties of
Nami. Nami hereby represents and warrants to each Purchaser that to his
knowledge, as of the Closing, after giving effect to transactions contemplated
by this Agreement:

(a)           No Violation.  The offering, issuance and sale by the
Company of the Purchased Securities being delivered at the Closing Date, the
execution, delivery and performance of the Transaction Documents by the Company
Parties that are party thereto and the consummation by the Company Parties that
are party thereto of the Transactions do not and will not:

 15

(i)            violate any provision of the
certificate of formation, partnership agreement, limited liability company
agreement, or other organizational or charter documents of any of the Company
Parties;

(ii)           constitute a default (or an event
that 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 (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a debt or other
obligation of the Company Parties) to which the Company Party is a party or by
which any property or asset of the Company Parties is bound or affected, except
to the extent that such default, termination, amendment, acceleration or cancellation
right would not, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect;

(iii)          result in a violation of any law,
statute, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which any of the Company
Parties is subject (including federal and state securities laws and
regulations) or by which any property or asset of the Company Parties is bound
or affected, except to the extent that such violation would not, singly or in
the aggregate,  reasonably be expected to
have a Material Adverse Effect; or

(iv)          result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of any of the
Company Parties (other than liens created pursuant to the Credit Agreement or
arising by, through or under the Company LLC Agreement), which liens would
reasonably be expected to have a Material Adverse Effect.

(b)           Permits.  Each of the Company Parties possesses all
certificates, authorities or permits issued by the appropriate local, state or
federal regulatory agencies or bodies necessary to conduct the business
currently conducted by it, except for such certificates, authorizations or
permits which, (i) are of the type that are to be obtained in the ordinary
course of business and the Company Parties reasonably believe will be obtained,
or (ii) if not obtained, would not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect. 
None of the Company Parties has received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit which would reasonably be expected to have a Material
Adverse Effect.  The continuation,
validity and effectiveness of all such certificates, authorizations and permits
will not be adversely affected by the transactions contemplated by this
Agreement or the other Transaction Documents.

(c)           Information Underlying Reserve
Report.  The information underlying
the estimates of the Company’s proved reserves that was supplied to the Reserve
Engineer for the purposes of preparing the Reserve Report and estimates of the
proved reserves of the Company in the Reserve Report, including, production,
costs of operation, and, to the knowledge of Nami, future operations and sales
of production, was true and correct in all material respects on the dates such
information was provided, and such information was supplied and was prepared in
accordance with customary industry practices. 
Other than 

 16
 

normal production of the reserves, product price
fluctuations, and fluctuations of demand for such products, and except as
disclosed in the Reserve Report, Nami is not aware of any facts or
circumstances that would result in a materially adverse change in the reserves
in the aggregate, or the aggregate present value of the future net cash flows
therefrom, as reflected in the Reserve Report.

(d)           Title to Assets.  Except the such failures that would not,
singly or in the aggregate, reasonably be expected to have a Material Adverse
Effect:

(i)            Each of the Company Parties has (A)
legal, valid and defensible title to the interests in Oil and Gas Properties
supporting the estimates of its net proved reserves contained in the Reserve
Report, (B) good and marketable title in fee simple to all real property other
than Oil and Gas Properties covered by clause (A), and (C) good and marketable
title to all personal property owned by them, in each case free and clear of
all liens except those arising under the Credit Agreement or those that do not
materially affect the value of the property of the Company Parties, taken as a
whole, and do not materially interfere with the use made and proposed to be
made of such property by any of the Company Parties.

(ii)           With respect to all real property and
buildings held under lease by any of the Company Parties (A) such leases are in
full force and effect and constitute valid and binding obligations of the
Company Parties thereto; (B) there have not been and there currently are not
any defaults by any of the Company Parties thereunder except for such defaults
as would not, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect; (C) to the knowledge of Nami, no event has occurred,
which (whether with or without notice, lapse of time or the happening or
occurrence of any other event) would constitute a default thereunder by any of
the Company Parties entitling the lessor to terminate the lease; and (D) the
continuation, validity and effectiveness of all such leases under the current
rentals and other current terms thereof will not be adversely affected by the
transactions contemplated by this Agreement or the other Transaction Documents.

(e)           Environmental.  Except as would not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect:

(i)            The operations and activities of
each of the Company Parties are in compliance with all Environmental Laws and
Regulations.

(ii)           Each of the Company Parties has
obtained and is in compliance with all requirements, permits, licenses and
other authorizations which are required with respect to its operations, under
all Environmental Laws and Regulations.

(iii)          There is no civil, criminal,
administrative or other action, suit, demand, claim, hearing, notice of
violation, proceeding, investigation, notice or demand pending, received, or,
to the knowledge of Nami, threatened against the Company Parties relating in
any way to any Environmental Laws and Regulations, which has not been abated.

 17
 

(iv)          No real property currently owned,
leased or operated by the Company Parties has been placed on the National
Priorities List of hazardous waste sites by the U.S. Environmental Protection
Agency and to the knowledge of Nami, no real properties previously owned,
leased or operated by the Company Parties is currently identified on this list.

(v)           No underground tanks exist or, to the
knowledge of Nami, have existed on any real property now or previously owned,
leased, operated or utilized by the Company Parties or their predecessors.

(vi)          No Hazardous Materials have been
Released at, on, under or from any property currently owned operated or to the
knowledge of Nami, previously owned or operated by the Company Parties in
violation of Environmental Laws and Regulations or in a manner that could give
rise to any liability under Environmental Laws and Regulations.

(f)            No Consents.  No consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency or
body having jurisdiction over the Company Parties or any of their respective
properties is required for the issuance and sale of the Purchased Securities by
the Company or for the consummation by the Company of the Transactions, except
in each case for such consents, approvals, authorizations, orders,
registrations or qualifications (i) as have been obtained, (ii) as may be
required under state securities or Blue Sky laws in connection with the
purchase of the Purchased Securities, (iii) the failure of which to obtain
would not, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect or (iv) that will be obtained to effect the transfers
contemplated by the agreements set forth on Schedule 3.1(r).

(g)           No Default.  None of the Company Parties (i) is in
violation of its certificate of limited partnership, certificate of formation,
partnership agreement or other organizational or charter documents, (ii) is in
default and no event has occurred 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 (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a debt or other obligation of the Company Parties) to which a
Company Party is a party or by which any property or asset of the Company
Parties is bound or affected which default would reasonably be expected to have
a Material Adverse Effect, or (iii) is in violation of any law, statute, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which any of the Company Parties is subject
(including, without limitation, federal and state securities laws and
regulations), or by which any property or asset of the Company Parties is bound
or affected, which violation would reasonably be expected to have a Material
Adverse Effect.  To the knowledge of
Nami, no third party to any agreement, credit facility, debt or other instrument
(evidencing a debt or other obligation of the Company Parties) to which any of
the Company Parties is a party or by which any of them is bound or to which any
of their properties is subject, is in default under any such agreement, which
default would reasonably be expected to have a Material Adverse Effect.

 18
 

(h)           Absence of Changes.  Except as disclosed on Schedule 3.1(w),
since December 31, 2006, (i) none of the Company Parties has incurred any
liability or obligation, indirect, direct or contingent (including off-balance
sheet obligations), or entered into any transactions, not in the ordinary
course of business, that, singly or in the aggregate, is material to the
Company Parties, taken as a whole, (ii) except as a result of this offering,
there has not been any material change in the capitalization, or material
increase in the short-term debt or long-term debt, of the Company Parties,
taken as a whole, and (iii) there has not been any material adverse change, or
any development involving or which may reasonably be expected to involve, singly
or in the aggregate, a prospective material adverse change in the business,
prospects, financial condition or results of operations of the Company Parties,
taken as a whole.

(i)            Transactions With Affiliates and
Employees.  Except as described on Schedule
3.1(y), none of the officers or directors of the Company and, to the
knowledge of Nami, none of the employees of the Company Parties is a party to
any transaction with any of the Company Parties (other than for services as
employees, officers and 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 officer, director or such employee or, to the knowledge of Nami,
any entity in which any officer, director or any such employee has a
substantial interest or is an officer, director, trustee or partner, in each
case that would be required to be described in a registration statement on Form
S-1 filed with the Commission under the Securities Act.  There are no outstanding loans, advances
(except normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by any Company Party to or for the
benefit of any of the officers or directors of any Company Party or their
respective family members.

(j)            No Litigation.  Except as described on Schedule 3.1(z), there
are no legal or governmental proceedings pending or, to the knowledge of Nami,
threatened against the Company Parties to which any property of any of them is
subject that would reasonably be expected to have a Material Adverse Effect.

(k)           No Side Agreement.  Except as described on Schedule 3.1(bb),
there are no other agreements by, between or among the Company Parties or their
Affiliates, on the one hand, and any Purchaser or its Affiliates, on the other
hand, with respect to the transactions contemplated hereby, nor have any
promises or inducements been made between or among such parties with respect to
future transactions.

(l)            Taxes.  Except as would not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect and except
as set forth on Schedule 3.1(cc): (i) the Company Parties have, in
respect of their business, filed all tax returns required to be filed; (ii) to
the knowledge of Nami, such tax returns are true, correct and complete; (iii)
the Company Parties have paid in full all taxes shown to be due on such tax
returns; and (iv) none of the Company Parties have received any written notice
of deficiency or assessment from any taxing authority with respect to
liabilities for taxes of the Company, which have not been fully paid or finally
settled, unless being contested in good faith through appropriate proceedings
and for which adequate reserves are presented on the Financial Statements.

 19
 

(m)          EXCEPT AS EXPRESSLY SET FORTH IN THIS
SECTION 3.2, NEITHER NAMI NOR ANY OF HIS AFFILIATES, NOR ANY OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, MANAGERS, MEMBERS OR EMPLOYEES MAKES ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT
OF THE COMPANY OR ITS SUBSIDIARIES, OR ANY OF THEIR RESPECTIVE ASSETS,
LIABILITIES OR OPERATIONS.

(n)           Material Contracts.  True and complete copies of all material
contracts and other agreements (and all written amendments or other
modifications thereto) set forth on Schedule 3.01(hh) have been
furnished or made available to the Purchasers. 
Except as would not, singly or in the aggregate, reasonably be expected
to have a Material Adverse Effect: (i) all of such material contracts and other
agreements are valid, subsisting, in full force and effect, binding upon the
Company or its Subsidiaries party thereto, as applicable, and, to the knowledge
of Nami, binding upon the other parties thereto in accordance with their terms;
(ii) the Company or its Subsidiaries party thereto is not in default under any
of them, nor, to the knowledge of Nami, is any other party to any such contract
or other agreement in default thereunder; and (iii) to the knowledge of the
Nami, no event has occurred that with notice or lapse of time or both would
constitute a default by the Company or its Subsidiaries party thereto
thereunder.

3.3           Representations and Warranties of
Purchasers.  Each Purchaser hereby,
severally and not jointly, represents and warrants to the Company as follows:

(a)           Organization; Authority.  Purchaser is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
organization.  Purchaser has the
requisite partnership or limited liability company power and authority to enter
into any Transaction Documents to which Purchaser is a party and to consummate
the Transactions hereunder and thereunder and otherwise to carry out its
obligations hereunder and thereunder. 
The purchase by Purchaser of the Purchased Securities has been duly
authorized by all necessary action on the part of Purchaser.  Each of the Transaction Documents to which
Purchaser is a party has been (or upon delivery will be) duly executed and
delivered by Purchaser and constitutes, or when delivered in accordance with
the terms hereof will constitute, the valid and binding obligation of
Purchaser, enforceable against it in accordance with its terms, except as
limited by bankruptcy, insolvency or other similar laws now or hereafter in
effect affecting the enforcement of creditors’ rights and the application of
equitable principles.

(b)           Purchaser Intent.  Purchaser is acquiring the Purchased
Securities for investment purposes only and not with a view to or for
distributing or reselling such Purchased Securities or any part thereof.  Purchaser understands that Purchaser must
bear the economic risk of this investment indefinitely, that the Purchased
Securities may not be sold or transferred or offered for sale or transfer by it
without registration under the Securities Act and any applicable state
securities or Blue Sky laws or the availability of exemptions therefrom, and
that the Company has no present intention of registering the resale of any of
such Purchased Securities other than as contemplated by the Registration Rights
Agreement.  Purchaser understands that
any Transfer Agent of the Company will be issued stop-transfer restrictions
with respect to the Purchased Securities unless such transfer is subsequently 

 20
 

registered under the Securities Act and applicable
state and other securities laws or unless an exemption from such registration
is available.  Nothing contained herein
shall be deemed a representation or warranty by Purchaser to hold the Purchased
Securities for any period of time.

(c)           Purchaser Status.  Purchaser is an “accredited investor” (within
the meaning of Rule 501(a) under the Securities Act) and is acquiring the
Purchased Securities only for its own account and not for the account of others,
for investment purposes and not on behalf of any other account or Person or
with a view to, or for offer or sale in connection with, any distribution
thereof.  Purchaser is not an entity
formed for the specific purpose of acquiring the Purchased Securities.

(d)           Compliance with Laws and Other
Instruments.  The execution and
delivery of the Transaction Documents by the Purchaser and the consummation of
the transactions contemplated thereby do not conflict with or result in any
violation of or default under any provision of any charter, bylaws, trust
agreement, partnership agreement, or other organizational document, as the case
may be, of the Purchaser or any agreement, certificate, or other instrument to
which the Purchaser is a party or by which the Purchaser or, to Purchaser’s
knowledge, any of its properties is bound, or any permit, franchise, judgment,
decree, statute, rule, regulation, or other law applicable to the Purchaser or
the business or properties of the Purchaser.

(e)           Consents.  No consent, approval or authorization of, or
filing, registration or qualification with, any court or governmental or
regulatory department, agency or authority having jurisdiction over the
Purchaser or its business or properties is required for the execution and delivery
of this Agreement or the Company LLC Agreement by the Purchaser or the
performance of the Purchaser’s obligations and duties hereunder or thereunder.

(f)            No Government Declaration as to
Purchased Securities.  Purchaser
agrees and is aware that no federal or state agency has passed upon the
Purchased Securities, or made any findings or determination as to the fairness
of an investment in the Purchased Securities.

(g)           No Market for Purchased Securities.  Purchaser understands that there is presently
no established market for the Purchased Securities and that no public market
for the Purchased Securities may develop.

(h)           Reliance on Exemptions.  Purchaser understands that the Purchased
Securities are being offered and sold to Purchaser in reliance upon specific
exemptions from the registration requirements of United States federal and
state securities laws and that the Company is relying upon the truth and
accuracy of, and Purchaser’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of Purchaser set forth herein to
determine the availability of such exemptions and the eligibility of Purchaser
to acquire the Purchased Securities.

(i)            Experience of Purchaser.  Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in 

 21
 

the Purchased Securities, and has so evaluated the
merits and risks of such investment. 
Purchaser is able to bear the economic risk of an investment in the
Purchased Securities and, at the present time and in the foreseeable future, is
able to afford a complete loss of such investment.

(j)            Access
to Information.  Purchaser has been
afforded:

(i)            the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Purchased Securities and the merits and risks of investing in
the Purchased Securities;

(ii)           access to information about the
Company Parties and their respective financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; and

(iii)          the opportunity to obtain such
additional information from the Company that is necessary to make an informed
investment decision with respect to the investment.

EACH PURCHASER HEREBY ACKNOWLEDGES AND AGREES THAT,
EXCEPT AS EXPRESSLY SET FORTH IN SECTION 3.1, NEITHER THE COMPANY NOR ANY OF
ITS AFFILIATES, NOR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, MANAGERS,
MEMBERS OR EMPLOYEES MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
AT LAW OR IN EQUITY, IN RESPECT OF THE COMPANY OR ITS SUBSIDIARIES, OR ANY OF
THEIR RESPECTIVE ASSETS, LIABILITIES OR OPERATIONS.

(k)           Investment Risk.  Purchaser acknowledges that it is aware that
its investment in the Purchased Securities is speculative and involves a high
degree of risk.

(l)            Withholding.  The information provided by the Purchaser on
Form W-8 or Form W-9, as applicable, and delivered to the Company in connection
with this Agreement is true and complete.

(m)          Publicly Traded Partnerships.  Either the Purchaser is not a partnership, S
corporation, or grantor trust for U.S. federal income tax purposes, or, if the
Purchaser is a partnership, S corporation, or grantor trust, the Purchaser was
not formed with, and will not be used for, a principal purpose of permitting
the Company to satisfy the 100 partner limitation contained in Section
1.7704-1(h)(1)(ii) of the Treasury Regulations promulgated under the Code.

(n)           No Legal, Tax or Investment Advice.  Purchaser understands that nothing in this
Agreement or any other materials presented by or on behalf of the Company to
Purchaser in connection with the purchase of the Purchased Securities
constitutes legal, tax or investment advice. 
Purchaser has consulted such legal, tax and investment advisors as it,
in its sole discretion, has deemed necessary or appropriate in connection with
its purchase of the Purchased Securities.

 22
 

(o)           Certain Fees.  No brokerage or finder’s fees or commissions
are or will be payable by the Purchaser to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other Person
with respect to the offer, sale and issuance of the Purchased Securities, and
the Purchaser has not taken any action that could cause the Company to be
liable for any such fees or commissions.

(p)           Certain Illegal Activities.  Purchaser represents that neither it nor, to
its knowledge, any Person or entity controlling, controlled by or under common
control with Purchaser nor any Person or entity having a beneficial interest in
Purchaser nor any Person or entity on whose behalf Purchaser is acting
(a) is a Person or entity listed in the annex to Executive Order No. 13224
(2001) issued by the President of the United States (Executive Order Blocking
Property and Prohibiting Transactions with Persons Who Commit, Threaten to
Commit, or Support Terrorism), (b) is named on the List of Specially
Designated Nationals and Blocked Persons maintained by the U.S. Office of
Foreign Assets Control (OFAC), (c) is a non-U.S. shell bank or is
providing banking services indirectly to a non-U.S. shell bank, (d) is a
senior non-U.S. political figure or an immediate family member or close
associate of such figure, or (e) is otherwise prohibited from investing in
the Company pursuant to applicable U.S. anti-money laundering, antiterrorist
and asset control laws, regulations, rules or orders (categories (a) through
(e) collectively, a “Prohibited Investor”).  Purchaser agrees to provide the Company,
promptly upon request, all information that the Company reasonably deems
necessary or appropriate to comply with applicable U.S. anti-money laundering,
antiterrorist and asset control laws, regulations, rules and orders.  Purchaser consents to the disclosure to U.S.
regulators and law enforcement authorities by the Company and its Affiliates
and agents of such information about Purchaser as the Company reasonably deems
necessary or appropriate to comply with applicable U.S. anti-money laundering,
antiterrorist and asset control laws, regulations, rules and orders.  If Purchaser is a financial institution that
is subject to the Patriot Act, Public Law No. 107-56 (Oct. 26, 2001) (the “Patriot
Act”), Purchaser represents that Purchaser has met all of its respective
obligations under the Patriot Act. 
Purchaser acknowledges that if, following the investment in the Company
by Purchaser, the Company reasonably believes that Purchaser is a Prohibited
Investor or is otherwise engaged in suspicious activity or refuses to provide
promptly information that the Company requests, the Company has the right or
may be obligated to prohibit additional investments, segregate the assets
constituting the investment in accordance with applicable regulations or
immediately require the Purchaser to transfer the Purchased Securities.  Purchaser further acknowledges that Purchaser
will not have any claim against the Company or any of its Affiliates or agents
for any form of damages as a result of any of the foregoing actions.

(q)           No Side Agreements.  Except as described on Schedule 3.1(bb),
there are no other agreements by, among or between the Company or its
Affiliates, on the one hand, and any of the Purchasers or their Affiliates, on
the other hand, with respect to the transactions contemplated hereby nor
promises or inducements for future transactions between or among any of such parties.

(r)            Purchaser Status.  The
Purchaser is an “accredited investor” (within the meaning of Rule 501(a) under
the Securities Act) and is acquiring the Purchased Securities only for its own
account and not for the account of others, for investment purposes and not 

 23
 

on behalf of any other account or Person or with a
view to, or for offer or sale in connection with, any distribution
thereof.  None of the Purchasers, other than BLRTQS Partners, is an entity
formed for the specific purpose of acquiring the Purchased Securities. 
Each of the equity owners of BLRTQS Partners Investment Partners is an
“accredited investor” (within the meaning of Rule 501(a) under the Securities
Act).

ARTICLE IV

OTHER AGREEMENTS OF THE PARTIES

4.1           Transfer
Restrictions.

(a)           Purchaser understands that the
Purchased Securities are being offered in a transaction not involving a public
offering within the meaning of the Securities Act and that the offer and sale
of the Purchased Securities has not been registered under the Securities Act
and, unless so registered, the Purchased Securities may not be sold except as
permitted in the following sentence. 
Purchaser agrees that, if in the future Purchaser decides to offer,
resell, pledge or otherwise transfer such Purchased Securities, such Purchased
Securities may be offered, resold, pledged or otherwise transferred only
(i) to the Company or a subsidiary thereof, (ii) pursuant to a
registration statement that has been declared effective under the Securities
Act, or (iii) pursuant to an available exemption from the registration
requirements of the Securities Act, subject to compliance with any applicable
securities laws of any jurisdiction. 
Purchaser understands that the Transfer Agent for the Common Units will
not be required to accept for registration or transfer any Common Units
acquired by Purchaser hereunder, except upon presentation of evidence
satisfactory to the Company and the Transfer Agent that the foregoing
restrictions on transfer have been complied with.  Purchaser acknowledges that the Company
reserves the right prior to any offer, sale or other transfer of the Purchased
Securities to require the delivery of an opinion of counsel, certifications
and/or other information reasonably satisfactory to the Company.  Purchaser agrees not to engage in hedging
transactions with regard to the Purchased Securities unless in compliance with
the Securities Act.

(b)           Purchaser agrees to the imprinting,
so long as is required by this Section 4.1(b), of the following legend on
any certificate evidencing Purchased Securities:

THESE SECURITIES
HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.  NOTWITHSTANDING THE
FOREGOING, THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH
SECURITIES.

 24
 

Certificates
evidencing Purchased Securities shall not be required to contain such legend or
any other legend following any sale of such Purchased Securities pursuant to an
effective registration statement or Rule 144, or if such legend is not
required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the Staff of the
Commission).  

(c)           Removal of Legend.  Each Purchaser may request the Company to
remove the legend described in Section 4.1(b) from the certificates evidencing
the Purchased Securities by submitting to the Company such certificates,
together with an opinion of counsel reasonably satisfactory to the Company to
the effect that such legend is no longer required under the Securities Act or
applicable state laws, as the case may be. The Company shall cooperate with
such Purchaser to effect the removal of such legend.

4.2           Integration.  The Company shall not, and shall use its
commercially reasonable efforts to ensure that neither the Company nor any of
its Subsidiaries shall, sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in Section 2 of
the Securities Act) that would be integrated with the offer or sale of the
Purchased Securities to Purchaser in a manner that would require the
registration under the Securities Act of the sale of the Purchased Securities.

4.3           Audited Financial Statements.  The Company shall provide audited Financial
Statements to the Purchasers within 5 Business Days of Closing; such audited
Financial Statements shall be identical to the Financial Statements attached
hereto as Exhibit D.

4.4           Consents.  The Company shall obtain all consents,
approvals, authorizations, orders, registrations or qualifications and shall
file any documents or other information as may be required (i) to be filed
pursuant to applicable statutes and regulations of the Commonwealth of Kentucky
and/or the State of Tennessee relating to the licensing, transfer or operation
of oil and/or gas wells subsequent to the consummation of the Transactions
(except where the failure to shall obtain such consents, approvals,
authorizations, orders, registrations or qualifications and to file any such
documents or other information would not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect) and (ii) as necessary
to effect the transfers contemplated by the agreements set forth on Schedule
3.1(r).

ARTICLE V

INDEMNIFICATION

5.1           Survival.  The representations, warranties, agreements
and covenants contained herein shall survive the Closing and the issuance and
delivery of the Purchased Securities for a period of one year, with the
exception that the representations and warranties set forth in
Sections 3.1(a) through 3.1(h), 3.1(k), 3.1(o), 3.1(t), 3.1(q), 3.1(bb),
3.2(c), 3.2(e), 3.2(k) and 3.3(a) shall survive perpetually.  Upon the expiration of any representation and
warranty pursuant to this Section 5.1, unless written notice of a claim
based on such representation and warranty shall have been delivered to the
Indemnifying Party prior to such expiration, no claim may be brought based on
the breach of such representation and warranty.

 25
 

5.2           Indemnification.

(a)           Indemnification by the Company.  The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless the Purchasers, the
officers, directors, partners, members, agents, investment advisors and
employees of each of them, each Person who controls any Purchaser (within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, partners, members, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all Losses, as incurred, arising out
of or relating to the breach of any of the representations, warranties or
covenants of the Company contained herein, provided that such claim for
indemnification relating to a breach of a representation or warranty is made
prior to the expiration of such representation or warranty.

(b)           Indemnification by Nami.  Nami shall, notwithstanding any termination
of this Agreement, indemnify and hold harmless the Purchasers, the officers,
directors, partners, members, agents, investment advisors and employees of each
of them, each Person who controls any Purchaser (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, partners, members, agents and employees of each
such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all Losses, as incurred, arising out of or relating to
the breach of any of the representations, warranties or covenants of Nami
contained herein, provided that such claim for indemnification relating to a
breach of a representation or warranty is made prior to the expiration of such
representation or warranty, provided further that such claim for
indemnification relating to a breach of a representation or warranty shall
first be sought against the Company and Nami’s indemnification obligation shall
be reduced by the Company’s amount of indemnification provided pursuant to
Section 5.2(a).

(c)           Indemnification by Purchasers.  Each Purchaser shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such controlling
Persons, to the fullest extent permitted by applicable law, from and against
all Losses (as determined by a court of competent jurisdiction in a final
judgment not subject to appeal or review), as incurred, arising out of or relating
to the breach of any of the representations, warranties or covenants of such
Purchaser contained herein, provided that such claim for indemnification
relating to a breach of a representation or warranty is made prior to the
expiration of such representation or warranty, and, provided further, that the
liability of each Purchaser for all claims hereunder shall not exceed such
Purchaser’s Commitment Amount across from such Purchaser’s name on Schedule 1.

(d)           Conduct of Indemnification
Proceedings.

(i)            If any Proceeding shall be brought
or asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the Person from whom
indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying
Party shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified 

 26
 

Party and the payment of
all fees and expenses incurred in connection with defense thereof; provided,
that the failure of any Indemnified Party to give such notice shall not relieve
the Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that it shall be finally determined
by a court of competent jurisdiction (which determination is not subject to
appeal or further review) that such failure shall have proximately and
materially adversely prejudiced the Indemnifying Party.

(ii)           An Indemnified Party shall have the
right to employ separate counsel in any such Proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or Parties unless: (i) the Indemnifying
Party has agreed in writing to pay such fees and expenses; (ii) the Indemnifying
Party shall have failed promptly to assume the defense of such Proceeding and
to employ counsel reasonably satisfactory to such Indemnified Party in any such
Proceeding; or (iii) the named parties to any such Proceeding (including
any impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, such counsel
shall be at the expense of the Indemnifying Party).  It being understood, however, that the
Indemnifying Party shall not, in connection with any one such Proceeding, be
liable for the fees and expenses of more than one separate firm of attorneys at
any time for all Indemnified Parties, which firm shall be appointed by a majority
of the Indemnified Parties; provided, however, that in the case a single firm
of attorneys would be inappropriate due to actual or potential differing
interests or conflicts between such Indemnified Parties and any other party
represented by such counsel in such Proceeding or otherwise, then the
Indemnifying Party shall be liable for the fees and expenses of one additional
firm of attorneys with respect to such Indemnified Parties.  The Indemnifying Party shall not be liable
for any settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld.  No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party
from all liability on claims that are the subject matter of such Proceeding and
does not contain any admission of wrongdoing or illegal conduct.

(iii)          All reasonable fees and expenses of
the Indemnified Party (including reasonable fees and expenses to the extent
incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within ten Business Days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder); provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it is
finally 

 27
 

judicially determined that such Indemnified Party is
not entitled to indemnification hereunder.

5.3           Indemnification Cap.  The maximum liability of the Company and Nami
for claims under Section 5.2 with respect to the breach of a representation,
warranty or covenant of Company or Nami contained herein shall be no greater
than the total Commitment Amount.

5.4           Exclusive Remedy.  THE COMPANY AND THE PURCHASERS HEREBY
ACKNOWLEDGE AND AGREE THAT THE FOREGOING INDEMNIFICATION PROVISIONS IN THIS
ARTICLE V SHALL BE THE EXCLUSIVE REMEDY OF THE COMPANY AND THE PURCHASERS WITH
RESPECT TO THIS AGREEMENT AND THE EVENTS GIVING RISE THERETO AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, PROVIDED THAT THIS SECTION 5.4
SHALL NOT APPLY TO CLAIMS FOR INTENTIONAL FRAUD, NOR SHALL IT PREVENT ANY PARTY
FROM SEEKING INJUNCTIVE OR EQUITABLE RELIEF IN PURSUIT OF ITS INDEMNIFICATION
CLAIMS UNDER THIS ARTICLE V. THE COMPANY AND EACH PURCHASER ACKNOWLEDGES THAT
NEITHER IT, NOR ANY SUCCESSOR OR ASSIGN, SHALL HAVE ANY RIGHTS AGAINST THE
OTHER PARTIES OR ITS AFFILIATES WITH RESPECT TO THE TRANSACTIONS PROVIDED FOR
IN THIS AGREEMENT OTHER THAN AS IS EXPRESSLY PROVIDED IN THIS AGREEMENT.

5.5           Limitation on Damages.  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
THIS AGREEMENT, IN NO EVENT SHALL THE COMPANY OR ANY OF THE PURCHASERS BE
LIABLE TO THE OTHER UNDER THIS AGREEMENT FOR ANY EXEMPLARY, PUNITIVE, REMOTE,
SPECULATIVE, CONSEQUENTIAL, SPECIAL OR INCIDENTAL DAMAGES OR LOSS OF PROFITS.

ARTICLE VI

MISCELLANEOUS

6.1           Entire Agreement.  This Agreement, the Company LLC Agreement and
the Registration Rights Agreement contain the entire understanding of the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits
and schedules.  At or after the Closing,
and without further consideration, the Company will execute and deliver to
Purchasers such further documents as may be reasonably requested in order to
give practical effect to the intention of the parties under this Agreement, the
Company LLC Agreement and the Registration Rights Agreement.

6.2           Notices.  Any notice, request, instruction,
correspondence or other document to be given hereunder by either party to the
other (herein collectively called “Notice”) shall be in writing and delivered
in person or by courier service requiring acknowledgment of receipt of delivery
or mailed by certified mail, postage prepaid and return receipt requested, or
by telecopier, as follows:

 28
 

If to the Company
Parties, addressed to:

Vanguard
Natural Resources, LLC

Attn:  Scott W. Smith, Chief Executive Officer

7700
San Felipe, Suite 485

Houston,
Texas 77063

(832)-327-2260 (fax)

If to a Purchaser, addressed to the address set forth
on the applicable signature page hereto.

Notice given by
personal delivery, courier service or mail shall be effective upon actual
receipt.  Notice given by telecopier
shall be confirmed by appropriate answer back and shall be effective upon
actual receipt if received during the recipient’s normal business hours, or at
the beginning of the recipient’s next business day after receipt if not
received during the recipient’s normal business hours.  Any party may change any address to which
Notice is to be given to it by giving Notice as provided above of such change
of address.

6.3           Additional Information.  The Company may request from any Purchaser
such additional information as the Company may deem necessary to evaluate the
eligibility of such Purchaser to acquire the Purchased Securities, and may
request from time to time such information as the Company may deem necessary to
determine the eligibility of any Purchaser to hold the Purchased Securities or
to enable the Company to determine the Company’s compliance with applicable
regulatory requirements or tax status, and such Purchaser shall provide such
information as may reasonably be requested.

6.4           Amendments; Waivers.  No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and the Purchasers or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought.  No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.

6.5           Equal Treatment of Purchasers.  Without limiting the scope or effect of the
provisions of Article XII of the Company LLC Agreement, 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 is also offered to all of the parties to the Transaction
Documents.  For clarification purposes,
this provision constitutes a separate right granted to each Purchaser by the
Company and negotiated separately by each Purchaser, and is intended for the
Company to treat the Purchasers as a class and shall not in any way be
construed as the Purchasers acting in concert or as a group with respect to the
purchase, disposition or voting of the Purchased Securities or otherwise.

 29
 

6.6           Construction.  The headings herein are for convenience only,
do not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.  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.

6.7           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted
assigns.  The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Purchasers.  All or any
portion the Purchased Securities may be sold, assigned or pledged by any
Purchaser, subject to compliance with applicable securities laws, the terms of
this Agreement and the terms of the Company LLC Agreement.  All or any portion of the rights and
obligations of the Purchasers under this Agreement may not be transferred by
any Purchaser without the written consent of the Company, unless such transfer
is to an Affiliate of such Purchaser in which case written consent shall not be
required.

6.8           No Third-Party Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except that each Indemnified Party is an intended third party
beneficiary of Section 5.2 and (in each case) may enforce the provisions
of such Section directly against the parties with obligations thereunder.

6.9           Governing Law.  This Agreement will be construed in
accordance with and governed by the laws of the State of New York without
regard to principles of conflicts of laws.

6.10         Execution.  This Agreement may be executed in two or more
counterparts, all of which when taken together 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, it being understood that both
parties need not sign the same counterpart. 
In the event that any signature is delivered by facsimile transmission,
such signature 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 signature page were an original thereof.

6.11         Severability.  If any provision of this Agreement is held to
be invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

6.12         Expenses. 
The Company has agreed to reimburse the Purchasers in the amount of
$25,000 for the legal fees and expenses of Baker Botts L.L.P., counsel for the
Purchasers. If any action at law or equity is necessary to enforce or interpret
the terms of the Transaction Documents, the prevailing party shall be entitled
to reasonable attorneys’ fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.

6.13         Remedies.  In addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, the
Purchasers and the Company will be entitled to specific performance under this
Agreement or the Registration Rights Agreement. 
The parties agree 

 30
 

that monetary
damages may not be adequate compensation for any loss incurred by reason of any
breach of obligations described in the foregoing sentence and hereby agree to
waive in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.

6.14         Independent Nature of Purchaser’s
Obligations and Rights.  The
obligations of each Purchaser under this Agreement or the Registration Rights
Agreement are several and not joint with the obligations of any other present
or subsequent purchaser of the Purchased Securities, and each Purchaser shall
not be responsible in any way for the performance of the obligations of any
other Purchaser under any agreement to purchase Purchased Securities.  The decision of each Purchaser to purchase
Purchased Securities pursuant to this Agreement has been made by such Purchaser
independently of any other Purchaser of the Purchased Securities and
independently of any information, materials, statements or opinions as to the
business, affairs, operations, assets, properties, liabilities, results of
operations, condition (financial or otherwise) or prospects of the Company
Parties that may have been made or given by any other Purchaser of the
Purchased Securities or by any agent or employee of any such Purchaser, and no
Purchaser or any of its agents or employees shall have any liability to any
other Purchaser (or any other Person) relating to or arising from any such
information, materials, statements or opinions. 
Nothing contained herein, in the Company LLC Agreement or in the
Registration Rights Agreement, and no action taken by any Purchaser pursuant
thereto, shall be deemed to constitute such Purchaser as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that such Purchaser is in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by this
Agreement or the Registration Rights Agreement. 
Each Purchaser acknowledges that no other Purchaser of the Purchased
Securities has acted as agent for such Purchaser in connection with making its
investment hereunder and that no other Purchaser will be acting as agent of
such Purchaser in connection with monitoring its investment hereunder.  Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement or out of the Registration Rights
Agreement, and it shall not be necessary for any other Purchaser of the
Purchased Securities to be joined as an additional party in any proceeding for
such purpose.  Each Purchaser represents
that it has been represented by its own separate legal counsel in its review
and negotiations of this Agreement and the Registration Rights Agreement.

[Signature
pages to follow]

 31

IN
WITNESS WHEREOF, Purchaser has caused this Agreement to be executed by its duly
authorized representative as of the date set forth below.

	
  

  	
  VANGUARD NATURAL RESOURCES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott W. Smith

  	
   

  
	
   

  	
   

  	
  Name:  Scott
  W. Smith

  
	
   

  	
   

  	
  Title:    President
  and Chief Executive Officer

  
					

 

[Signature Page to Purchase Agreement]

 

	
   

  	
  /s/ Majeed S. Nami

  	
   

  
	
   

  	
  Majeed S. Nami

  

 

[Signature Page to Purchase Agreement]

 

	
   

  	
   

  	
   

  	
  LEHMAN BROTHERS MLP OPPORTUNITY

  
	
   

  	
   

  	
   

  	
    FUND L.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Lehman Brothers MLP Opportunity Associates L.P.,

  
	
   

  	
   

  	
   

  	
   

  	
    its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By: 

  	
  Lehman Brothers MLP Opportunity Associates

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
    L.L.C., its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Jeff P. Wood

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:  Jeff P.
  Wood

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:   Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Address:

  	
  399 Park Avenue, 9th Floor

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  New York, NY 10022

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Attention: Michael Cannon

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Facsimile No.: 646.758.4208

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Telephone No.: 212.526.0029

  
							

 

[Signature Page to Purchase Agreement]

 

	
  

  	
  THIRD POINT PARTNERS LP

  
	
   

  	
   

  
	
   

  	
   

  	
  By: Third Point LLC, its investment manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Justin Nadler

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  Justin
  Nadler

  
	
   

  	
   

  	
   

  	
  Title:  COO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
  390 Park Avenue

  
	
   

  	
   

  	
   

  	
  New York, NY 10022

  
	
   

  	
   

  	
   

  	
  Attention: Justin Nadler

  
	
   

  	
   

  	
   

  	
  Facsimile No.: 212.224.7401

  
	
   

  	
   

  	
   

  	
  Telephone No.: 212.224.7401

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THIRD POINT PARTNERS QUALIFIED LP

  
	
   

  	
   

  
	
   

  	
   

  	
  By: Third Point LLC, its investment manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Justin Nadler

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  Justin
  Nadler

  
	
   

  	
   

  	
   

  	
  Title:  COO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
  390 Park Avenue

  
	
   

  	
   

  	
   

  	
  New York, NY 10022

  
	
   

  	
   

  	
   

  	
  Attention: Justin Nadler

  
	
   

  	
   

  	
   

  	
  Facsimile No.: 212.224.7401

  
	
   

  	
   

  	
   

  	
  Telephone No.: 212.224.7401

  
									

 

[Signature
Page to Purchase Agreement]

 

	
   

  	
   

  	
  BLRTQS Partners

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Todd Q. Swanson

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  Todd Q.
  Swanson

  
	
   

  	
   

  	
   

  	
  Title:  Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Bradley L. Radoff

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Bradley L. Radoff

  
	
   

  	
   

  	
   

  	
  Title: Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
  BLRTQS Partnership

  
	
   

  	
   

  	
   

  	
  4899 Montrose

  
	
   

  	
   

  	
   

  	
  Unit 1701

  
	
   

  	
   

  	
   

  	
  Houston, TX 77006

  
						

 

 

[Signature
Page to Purchase Agreement]

Schedule 1

	
  Entity

  	
   

  	
  Common 

  Units

  	
   

  	
  Commitment Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lehman Brothers MLP
  Opportunity Fund L.P.

  	
   

  	
  1,145,000

  	
   

  	
  $

  	
  20,610,000

  	
   

  
	
  Third Point Partners
  Qualified LP

  	
   

  	
  474,030

  	
   

  	
  8,532,540

  	
   

  
	
  Third Point Partners LP

  	
   

  	
  556,470

  	
   

  	
  10,016,460

  	
   

  
	
  BLRTQS Partners

  	
   

  	
  114,500

  	
   

  	
  2,061,000

  	
   

  
	
  Total

  	
   

  	
  2,290,000

  	
   

  	
  $

  	
  41,220,000

  	
   

  

 

Schedule
3.1(k) — Issuance of the Purchased Securities

1.             Robert’s
Options.  Pursuant to his
employment agreement,  at the IPO,
Mr. Richard A. Robert will receive options to purchase 100,000 units at the IPO
price.  The options vest into Common
Units and have a term of five years.

2.             Class
B Units.  There are 460,000
Class B Units authorized to be issued, of which 365,000 have previously been
issued to Scott W. Smith and Richard A. Robert.

Schedule
3.1(r) — Future Assignments

1.             Assignment and Bill of Sale
effective as of January 5, 2007 from AE to VEE of an undivided 60% of AE’s
working interest in all the AE PUD Properties.

2.             Assignment and Bill of Sale
effective as of January 5, 2007 from AE to VEE of all of AE’s interest in
certain non-producing oil and gas properties in Tennessee.

3.             Assignment and Bill of Sale
effective as of January 5, 2007 from AE to VEE of AE’s interest in certain
other PUD Strata in Tennessee.

Schedule
3.1(w) — Changes

1.             Credit
Agreement.  On January 3,
2007, Nami Holding Company, LLC, as borrower, entered in to a Credit Agreement,
as subsequently amended, with Citibank, N.A. as Administrative Agent, the
Lenders party thereto, Citibank, N.A. as Co-Lead Arranger, Sole Bookrunner and
Co-Syndication Agent and BNP Paribas as Co-Lead Arranger and Co-Syndication
Agent.

2.             Asset
Conveyances.  In connection
with this private placement and the contemplated initial public offering, the
Company and its Subsidiaries have entered into various assignment and bill of
sale agreements with Vinland Energy Eastern, LLC and its affiliates for the
purpose of effecting the steps set forth in the Structure Memorandum of Vinson
& Elkins dated as of March 1, 2007. 
Please see the list of asset conveyances set forth on Schedule 3.1(y) to
this Agreement.

Schedule 3.1(y)
— Related Party Transactions

1.             Material
Contracts.  The Company has
entered into the following material contracts with Vinland Energy Gathering,
LLC and/or its affiliates:

(i)          Management
Services Agreement. 
Effective as of January 5, 2007, the Operating Company and the Operating
Subsidiaries entered in to a Management Services Agreement Vinland Energy
Operations, LLC (“VEO”).

(ii)           Participation
Agreement. 
Effective as of January 5, 2007, the Operating Company and the Operating
Subsidiaries entered in to a Participation Agreement with Vinland Energy
Eastern, LLC (“VEE”).

(iii)          Operating
Agreement (Kentucky Operations).  Effective as of January 5, 2007, Trust Energy
Company, LLC (“TEC”) entered in to an Operating Agreement with Vinland Energy
Operations, LLC (“VEO”), as Operator and VEE, as a Non-Operator.

(iv)          Operating
Agreement (Tennessee Operations).  Effective as of January 5, 2007, Ariana
Energy, LLC (“AE”), entered in to an Operating Agreement with VEO, as Operator
and VEE, as a Non-Operator.

(v)           Well
Services Agreement (Kentucky Operations).  Effective as of January 5, 2007, the
Operating Company and TEC entered in to a Well Services Agreement with VEO.

(vi)          Well
Services Agreement (Tennessee Operations).  Effective as of January 5, 2007, the
Operating Company and AE entered in to a Well Services Agreement with VEO.

(vii)         Gathering
and Compression Agreement (Kentucky Operations).  Effective as of January 5, 2007, the
Operating Company and TEC entered in to a Gathering and Compression Agreement
with Vinland Energy Gathering, LLC (“VEG”) and VEE.

(viii)        Gathering
and Compression Agreement (Tennessee Operations).  Effective as of January 5, 2007, the
Operating Company and AE entered in to a Gathering and Compression Agreement
with VEG and VEE.

(ix)           Revenue
Payment Agreement. 
Effective as of January 5, 2007, TEC entered in to a Revenue Payment
Agreement with Nami Resources Company, LLC (“NRC”).

(x)            Indemnity
Agreement. 
Effective as of January 5, 2007, TEC, NRC and VEE entered in to an Indemnity
Agreement.

(xi)           Gas
Supply Agreement. 
On April 18, 2007, NRC and TEC entered into a Gas Supply Agreement.

2.             Asset
Conveyances.  In connection
with this private placement and the contemplated initial public offering, the
Company and it Subsidiaries have entered into various assignment and bill 

 1
 

of sale agreements
with Vinland Energy Eastern, LLC and its affiliates for the purpose of
effecting the steps set forth in the Structure Memorandum of Vinson &
Elkins dated as of April 18, 2007.  These
conveyance agreements are listed as follows:

All Proved Developed, Proved Undeveloped (“PUD”) and All
Other Strata

(i)            Assignment and Bill of Sale
effective as of January 5, 2007, from TEC to VEE of an undivided 60% of TEC’s
working interest in certain of the TEC PUD properties.

(ii)           Assignment and Bill of Sale effective
as of January 5, 2007 from NRC to TEC of all of NRC’c interest in oil and gas
producing leasehold interests in Kentucky, except the oil and gas leases
associated with the Asher litigation as described on Schedule 3.1 (p) to this
Agreement.

(iii)          Assignment and Bill of Sale effective
as of January 5, 2007 from TEC to VEE of all of TEC’s interest in certain
non-producing oil and gas properties in Kentucky.

Non-AMI Leases

(iv)          Assignment and Bill of Sale effective
as of January 5, 2007 from AE to VEE of all interests and assets not within the
Tennessee AMI established between the parties.

(v)           Assignment and Bill of Sale effective
as of January 5, 2007 from NRC to VEE of all interests and assets not within
the Kentucky AMI established between the parties.

Midstream Assets

(vi)          Assignment and Bill of Sale effective
as of January 5, 2007, from TEC to VEG of TEC’s interest in any midstream
assets held by TEC in Kentucky.

(vii)         Assignment and Bill of Sale effective
as of January 5, 2007, from NRC to VEG of NRC’s interest in any midstream
assets held by NRC in Kentucky.

(viii)        Assignment and Bill of Sale effective as
of January 5, 2007 from AE to VEG of AE’s interest in any midstream assets held
by AE in Tennessee.

Operating Assets

(ix)           Assignment and Bill of Sale effective
as of January 5, 2007, from TEC to VEO of TEC’s interest in any operating
assets held by TEC in Kentucky.

(x)            Assignment and Bill of Sale
effective as of January 5, 2007, from NRC to VEO of NRC’s interest in any
operating assets held by NRC in Kentucky.

(xi)           Assignment and Bill of Sale effective
as of January 5, 2007 from AE to VEO of AE’s interest in any operating assets
held by AE in Tennessee.

 2
 

Other PUD Strata

(xii)          Assignment and Bill of Sale effective
as of January 5, 2007 from TEC to VEE of TEC’s interest in certain other PUD
Strata in Kentucky.

(xiii)         Assignment and Bill of Sale effective
as of January 5, 2007 from TEC to NRC of TEC’s interest in certain
non-producing wells in Kentucky.

Member Interests

(xiv)        Contribution Agreement effective as of
April 18, 2007 from Nami Capital Partners, LLC to the Company of Nami Capital
Partner’s 36.044% member interest in the Operating Company to the Company in
exchange for 1,171,430 Common Units.

(xv)         Contribution Agreement effective as of
April 18, 2007 from the Majeed S. Nami Irrevocable Trust dated 11. January 2007
to the Company of such trust’s 34.062% member interest in the Operating Company
to the Company in exchange for 1,107,015 Common Units.

(xvi)        Contribution Agreement effective as of
April 18, 2007 from the Majeed S. Nami Personal Endowment Fund to the Company
of such fund’s 29.894% member interest in the Operating Company to the Company
in exchange for 971,555 Common Units.

3.             Employment
Agreements.

(i)            On December 27, 2006, but effective
as of October 9, 2006, the Operating Company entered in to an Employment
Agreement with Scott W. Smith. This employment agreement was subsequently
terminated by an amended employment agreement that was entered into on April
18, 2007 between the Company, VNR Holdings and Scott W. Smith.

(ii)           On January 2, 2007, a the Operating
Company entered in to an Employment Agreement with Richard A. Robert.  This employment agreement was subsequently
terminated by an amended employment agreement that was entered into on April
18, 2007 between the Company, VNR Holdings and Richard A. Robert.

 3

Schedule
3.1(z) — No Litigation

1.             Asher
Litigation.  Nami Resource
Company, LLC (“NRC”) has been involved in an ongoing dispute with a significant
lessor, Asher and Land and Mineral Company, Ltd. (“Asher”), pursuant to which
Asher claims that NRC did not correctly calculate the royalties paid to it and
that NRC has failed to abide by certain terms of the leases relating to the
coordination of oil and gas development with coal development. On September 8,
2006, Asher filed a complaint to initiate an action styled Asher Land and Mineral, Ltd. v. Nami Resources
Company, LLC, Bell Circuit Court, Civil Action No. 06-CI-00417. In
that action, Asher sought damages and rescission of its leases with NRC. Before
NRC filed a responsive pleading, Asher voluntarily withdrew its complaint and
dismissed that action. On December 15, 2006, Asher filed a new action styled
Asher Land and Mineral, Ltd., Bell Circuit Court, Civil Action No. 06-CI-00566.
In that action, Asher has made the same allegations as in the prior suit and
added a claim for an undetermined amount of punitive damages. The parties have
exchanged discovery requests.

Pursuant
to the asset conveyance agreements described on Schedule 3.1(y), the Company
will receive 100% of the net revenue from the existing producing wells located
on the Asher oil and gas lease but it will not receive an assignment of any
interest in the Asher leases.  The Asher
lease and the litigation related thereto will be retained by NRC.

2.             Francis
Litigation.  James E. Francis. v. Nami Resources Company, LLC.  U.S. District Court, Eastern District of
Kentucky, London Division; Case No. 6-04-CV-510-KKC.  Mr. Francis was an investor in two
well-drilling programs conducted in 1999 and in 2000. Mr. Francis invested
approximately $1,600,000.00 in certain wells that were part of the 1999
drilling program. Mr. Francis has asserted that he has not been provided
accurate or sufficient information with regard to his investment in the
drilling program, and that he has not been compensated properly. He has sought
compensatory and punitive damages. NRC has absolutely denied those contentions,
and it has asserted a counterclaim against the Plaintiff, inter alia, to recover certain production
costs not paid by the Plaintiff.  NRC has
also asserted that all of the parties’ claims should be submitted to
arbitration pursuant to the terms of their agreements. The trial set in this
matter for November 14, 2006 was continued on the Court’s own motion, and it
has not been reset. A telephonic pre-trial conference was held on January 3,
2007, at which time the Court set deadlines for the completion of the briefing
of the parties’ cross-motions for summary judgment.

3.             Nave
Litigation.  Leonard K. Nave and Kentucky
Natural Gas Service v. Majeed Saiedynami, Nami Resources, LLC, et al.   Laurel Circuit Court, Division I, Civil
Action No. 06-CI-1088.  The Plaintiffs in
this action (the “New Action”) assert that NRC failed to perform a settlement
agreement pursuant to which the parties settled all of the claims asserted in the
litigation styled Leonard K. Nave, et al. v.
Majeed Saiedynami, et al., Laurel Circuit, Civil Action No.
02-CI-817 (the “Original Action”).  They
also seek to reopen the Original Action in which the Plaintiffs claimed NRC
breached certain written and oral contracts for the supply of natural gas to
the Plaintiff, Kentucky Natural Gas and made certain tort claims against
NRC.  In the Original Action, NRC denied
the existence of the alleged contracts on which the Original Complaint was
based, and it further asserted that the Plaintiff’s failure to perform prior
contracts with NRC by failing to pay for any gas received from NRC was an
absolute defense to the claims against NRC.

Schedule
3.1(bb) — No Side Agreement

1.             Reference is made to the material
contracts and asset conveyances described on Schedule 3.1(y). Each of those
agreements will be entered into in connection with the transactions
contemplated by this Agreement.

Schedule 3.1(cc)
— Taxes

 

1.             Two of the Company Subsidiaries are currently undergoing
a severance tax audit for the years 2000 through 2005 for production in the
Commonwealth of Kentucky.

 

Schedule
3.1(hh) — Material Contracts

1.             Management
Services Agreement. 
Effective as of January 5, 2007, the Operating Company and the Operating
Subsidiaries entered in to a Management Services Agreement Vinland Energy
Operations, LLC (“VEO”).

2.             Participation
Agreement. 
Effective as of January 5, 2007, the Operating Company and the Operating
Subsidiaries entered in to a Participation Agreement with Vinland Energy
Eastern, LLC (“VEE”).

3.             Operating
Agreement (Kentucky Operations).  Effective as of January 5, 2007, Trust Energy
Company, LLC (“TEC”) entered in to an Operating Agreement with Vinland Energy
Operations, LLC (“VEO”), as Operator and VEE, as a Non-Operator.

4.             Operating
Agreement (Tennessee Operations).  Effective as of January 5, 2007, Ariana
Energy, LLC (“AE”), entered in to an Operating Agreement with VEO, as Operator
and VEE, as a Non-Operator.

5.             Well
Services Agreement (Kentucky Operations).  Effective as of January 5, 2007, the
Operating Company and TEC entered in to a Well Services Agreement with VEO.

6.             Well
Services Agreement (Tennessee Operations).  Effective as of January 5, 2007, the
Operating Company and AE entered in to a Well Services Agreement with VEO.

7.             Gathering
and Compression Agreement (Kentucky Operations).  Effective as of January 5, 2007, the
Operating Company and TEC entered in to a Gathering and Compression Agreement
with Vinland Energy Gathering, LLC (“VEG”) and VEE.

8.             Gathering
and Compression Agreement (Tennessee Operations).  Effective as of January 5, 2007, the
Operating Company and AE entered in to a Gathering and Compression Agreement
with VEG and VEE.

9.             Revenue
Payment Agreement. 
Effective as of January 5, 2007, TEC entered in to a Revenue Payment
Agreement with Nami Resources Company, LLC (“NRC”).

10.          Indemnity
Agreement. 
Effective as of January 5, 2007, TEC, NRC and VEE entered in to an
Indemnity Agreement.

11.          Gas
Supply Agreement. 
On April 18, 2007, NRC and TEC entered into a Gas Supply Agreement.

12.          Credit
Agreement. On January 3, 2007, Nami Holding Company, LLC,
as borrower, entered in to a Credit Agreement, dated January 3, 2007,  with Citibank, N.A. as Administrative Agent,
the Lenders party thereto, Citibank, N.A. as Co-Lead Arranger, Sole Bookrunner
and Co-Syndication Agent and BNP Paribas as Co-Lead Arranger and Co-Syndication
Agent.

13.          Employment
Agreement.  On
December 27, 2006, but effective as of October 9, 2006, the Operating Company
entered in to an Employment Agreement with Scott W. Smith. This employment
agreement was subsequently terminated by an amended employment agreement that
was entered into on April 18, 2007 between the Company, VNR Holdings and Scott
W. Smith.

14.          Employment
Agreement. On January 2, 2007, a the Operating Company
entered in to an Employment Agreement with Richard A. Robert.  This employment agreement was subsequently
terminated by an amended employment agreement that was entered into on April
18, 2007 between the Company, VNR Holdings and Richard A. Robert.

15.          ISDA
Master Agreement. 
Nami Holding Company entered into an ISDA Master Agreement with
Citibank, N.A. relating to the following transactions:

(i)            Commodity Option Transaction dated
January 10, 2007 for $7.50 per MMBtu puts for the period from February 1, 2007 –
March 31, 2007.

(ii)           Commodity Option Transaction dated
January 10, 2007 for $7.50 per MMBtu puts for the period from April 1, 2007 –
June 30, 2007.

(iii)          Commodity Option Transaction dated
January 10, 2007 for $7.50 per MMBtu puts for the period from July 1, 2007 –
September 30, 2007.

(iv)          Commodity Option Transaction dated
January 10, 2007 for $7.50 per MMBtu puts for the period from October 1, 2007 –
December 31, 2007.

(v)           Commodity Swap Transactions dated
January 10, 2007 for Calendar Year 2010 at a price of $7.53 based on the
Appalachia (Columbia Gas) Inside FERC Index.

(vi)          Commodity Swap Transactions dated
January 10, 2007 for Calendar Year 2011 at a price of $7.15 based on the
Appalachia (Columbia Gas) Inside FERC Index

15.           Hedge
Transaction Documents. 
Nami Holding Company entered into the following hedge transaction
documents with BNP Paribas:

 

(i)            Commodity  Swap Transaction dated January 10, 2007 for
July 1, 2007 – December 31, 2007 at a price of $7.50 per MMBtu based on the
Appalachia (Columbia Gas) Inside FERC Index.

(ii)           Commodity Swap Transaction dated
January 10, 2007 for Calendar Year 2008 at a price of $8.14 per MMBtu based on
the Appalachia (Columbia Gas) Inside FERC Index.

(iii)          Commodity Swap Transaction dated
January 10, 2007 for Calendar Year 2009 at a price of $7.78 per MMBtu based on
the Appalachia (Columbia Gas) Inside FERC Index.

 

(iv)          Commodity Option Transaction dated
January 5, 2007 for Calendar Year 2008 for $7.50 per MMBtu puts.

(v)           Commodity Option Transaction Dated
January 5, 2007 for Calendar Year 2009 for $7.50 per MMBtu puts.

16.           Management Services Agreement.  On April 2, 2007, the Company and VNR Holdings
entered into a Management Services Agreement pursuant to which VNR Holdings
will provide the Company, to the extent requested by the Company, with general
employment-related services including payroll and employment-administration,
and related information technology and communication services

Exhibit A

Opinion of Vinson & Elkins L.L.P.

The
Company shall furnish to the Purchasers at the time of purchase an opinion of
Vinson & Elkins L.L.P., counsel for the Company, dated as of the date of
the purchase, stating that:

(a)           Company
Formation.  The Company has been duly
formed and is validly existing as a limited liability company under the laws of
the State of Delaware, with limited liability company power and authority to
own or lease its properties and to conduct its business, in each case in all material
respects as currently being conducted.

(b)           Capitalization
and Valid Issuance of Purchased Units. 
Immediately after the Closing, the only issued and outstanding limited
liability company interests of the Company will consist of 5,540,000  Common Units and 365,000 Class B Units.  All outstanding Common Units and Class B
Units have been duly authorized and, when paid for, issued and delivered
pursuant to the Purchase Agreement, will be validly issued in accordance with
the Company LLC Agreement and are fully paid (to the extent required under the
Company LLC Agreement) and nonassessable (except as such nonassessability may
be affected by Section 18-607 of the Delaware LLC Act and otherwise by matters
described in the Company LLC Agreement).

(c)           Authority.  The Company has all requisite limited
liability company power and authority to issue, sell and deliver the Purchased
Securities being sold to the Purchasers pursuant to the Purchase Agreement, in
accordance with and upon the terms and conditions set forth in the Purchase
Agreement and the Company LLC Agreement.

(d)           Enforceability
of the Purchase Agreement.  The
Purchase Agreement has been duly authorized, executed and delivered by the
Company and, assuming the due authorization, execution and delivery of the
Purchase Agreement by the other parties thereto, is a valid and legally binding
agreement of the Company, enforceable against the Company in accordance with
its terms.

(e)           Enforceability
of Registration Rights Agreement. 
The Registration Rights Agreement has been duly authorized, executed and
delivered by the Company and, assuming the due authorization, execution and
delivery of the Registration Rights Agreement by the Purchasers party thereto,
is a valid and legally binding agreement of the Company, enforceable against
the Company in accordance with its terms.

(f)            No
Violation.  The offering, issuance
and sale by the Company of the Purchased Securities being delivered at the
Closing Date, the execution, delivery and performance of the Purchase Agreement,
the Registration Rights Agreement and the Company LLC Agreement by the Company
and the consummation by the Company of the transactions under the Purchase
Agreement, the Registration Rights Agreement and the Company LLC Agreement do
not and will not:

violate any provision of the
certificate of formation or the Company LLC Agreement; or

result in a violation of the
Delaware LLC Act or federal law, except to the extent that such violation would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

(g)           Issuance of the
Purchased Securities.  The Purchased
Securities, and the limited partner interests represented thereby, have been
duly authorized and, when issued and paid for in accordance with the Purchase
Agreement, will be validly issued, fully paid and nonassessable (except as such
nonassessability may be affected by Section 18-607 of the Delaware LLC Act) and
shall not be subject to preemptive or similar rights.  The issuance and sale of the Purchased
Securities will not obligate the Company to issue Units to any Person (other
than the Purchasers) arising by, through and under the Company LLC Agreement.

(h)           No Preemptive
Rights. Except as provided in Schedule 3.1(k) to the Purchase
Agreement, there are no outstanding options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable or
exchangeable for, or any right to subscribe for or acquire, any equity
securities of the Company, or contracts or commitments by which the Company is
bound to issue additional equity securities of any of the Company, or
securities or rights convertible or exchangeable into equity securities of any
of the Company nor is there any restriction upon the voting or transfer of any
equity securities of the Company.

(i)            No Consents.  No consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency or
body under the Delaware LLC Act or federal law is required for the issuance and
sale of the Purchased Securities by the Company or for the consummation by the
Company Parties of the transactions contemplated by the Purchase Agreement, the
Registration Rights Agreement or the Company LLC Agreement, except in each case
for such consents, approvals, authorizations, orders, registrations or
qualifications (i) as have been obtained, (ii) as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of
the Purchased Securities, as to which such counsel need not express any opinion
or (iii) the failure of which to obtain would not, individually or in the
aggregate, have a Material Adverse Effect.

(j)            Private
Placement.  Assuming the accuracy of
the representations and warranties of the Purchasers contained in the Purchase
Agreement and the Purchaser Questionnaires, the offer, sale and issuance of the
Purchased Securities to the Purchasers as contemplated by the Purchase
Agreement may be effected without registration under the Securities Act.

(k)           Investment
Company.  None of the Company Parties
is an “investment company” within the meaning of the Investment Company Act of
1940, as amended.

Exhibit A-1

Qualifying Income Opinion

The
Company shall furnish to the Company at the time of purchase an opinion of
Vinson & Elkins L.L.P., dated as of the date of the purchase, stating that:

Based
on the facts set forth above and Vanguard’s letter dated April 18, 2007, it is
our opinion that 90 percent or more of the gross income currently earned by
Vanguard constitutes “qualifying income” within the meaning of section 7704(d)
of the Code.

Exhibit A-2

Opinion of Wyatt, Tarrant & Combs
LLP

The
Company shall furnish to the Purchasers at the time of purchase an opinion of
Wyatt, Tarrant & Combs LLP, counsel for the Company, dated as of the date
of the purchase, stating that:

1.             The Operating
Company has been duly formed and is validly existing as a limited liability
company under the laws of the Commonwealth of Kentucky, with all necessary
limited liability company power and authority to own or lease its properties
and to conduct its business, in each case in all material respects as currently
conducted, and is duly qualified or registered as a foreign limited liability
company for the transaction of business and is in good standing under the laws
of each jurisdiction set forth under its name on Annex I to this opinion.

2.             Each of the
Operating Subsidiaries has been duly formed and is validly existing as a
limited liability company under the applicable laws of the state of its
formation, with all necessary limited liability company power and authority to
own or lease its properties and to conduct its business, in each case in all
material respects as currently conducted. 
Each of the Operating Subsidiaries is duly registered or qualified as a
foreign limited liability company for the transaction of business and is in
good standing under the laws of each jurisdiction set forth under its name on
Annex 1 to this opinion.

3.             The Company is the
sole member of the Operating Company; such member interest has been duly
authorized and validly issued in accordance with the Operating Company LLC
Agreement and is fully paid (to the extent required under the Operating Company
LLC Agreement) and nonassessable (except as such nonassessability may be
affected by KRS 275.230 and otherwise by matters contained in the Operating
Company LLC Agreement).  The Company owns
such member interest free and clear of all liens, encumbrances (except for
restrictions on transferability contained in the Operating Company LLC
Agreement), security interests, equities, charges or claims in respect of which
a financing statement under the Uniorm Commercial Code naming the Company as
debtor is on file in the office of the Secretary of State of Delaware,
otherewise known to us without independent investigation other than those
created under applicable law, and except for such liens as may be imposed under
the Credit Agreement.

4.             The Operating
Company is the sole member of each of the Operating Subsidiaries; such member
interests have been duly authorized and validly issued in accordance with the
Operating Subsidiaries’ limited liability company agreements and are fully paid
(to the extent required under the Operating Subsidiaries’ limited liability
company agreement) and nonassessable (except as such nonassessability may be
affected by KRS 275.230 and TCA             
and otherwise by matters contained in the Operating Subsidiaries’ limited
liability company agreements).  The
Operating Company owns such member interests free and clear of all liens,
encumbrances (except for restrictions on transferability as contained in the
Operating Subsidiaries’ limited liability company agreements), security
interests, charges or claims in respect of which a financing statement under
the Uniorm Commercial Code naming the Company as debtor is on file in the
office of the Secretary of State of Kentucky or the Secretary of State of
Tennessee, otherewise known to us without independent investigation other than
those created under applicable law, and except for such liens as may be imposed
under the Credit Agreement.

5.             Each Assignment
Agreement has been duly authorized, executed and delivered by the Operating
Company, Trust Energy Company, LLC, or Ariana Energy, LLC, as applicable, and,
assuming the due authorization, execution and delivery of each Assignment
Agreement by each of the other parties thereto, is a valid and legally binding
agreement of the Operating Company, Trust Energy Company, LLC or Ariana Energy,
LLC, as applicable, enforceable against each in accordance with its terms.

6.             Each Related Party
Agreement has been duly authorized, executed and delivered by the Operating
Company, Trust Energy Company, LLC or Ariana Energy, LLC, as applicable, and,
assuming the due authorization, execution and delivery of each Related Party
Agreement by each of the other parties thereto, is a valid and legally binding
agreement of the Operating Company, Trust Energy Company, LLC or Ariana Energy,
LLC, as applicable, enforceable against each in accordance with its terms.

7.             The offering,
issuance and sale by the Company of the Purchased Securities being delivered at
the Closing Date, the execution, delivery and performance of the Transaction Documents
by the Company Parties and the consummation by the Company Parties of the
transactions under the Transaction Documents do not and will not:

a.             result in a violation of any order, judgment,
injunction, decree or other restriction known to us of any court or
governmental authority to which any of the Company Parties is subject, or by
which any property or asset of the Company Parties is bound or affected, except
to the extent that such violation would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; or

b.             constitute a default (or an event that 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 (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or
other instrument (evidencing a debt or other obligation of the Company Parties)
listed on Annex 2 to this opinion, except to the extent that such default,
termination, amendment, acceleration or cancellation right would not, singly or
in the aggregate, reasonably be expected to have a Material Adverse Effect;

c.             result in a violation of the Kentucky Limited Liability
Company Act or the Tennessee Limited Liability Company Act, except to the
extent that such violation would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

d.             result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of any of the Company Parties (other
than liens created pursuant to the Credit Agreement or arising by, through or
under the Transaction Documents), which liens would reasonably be expected to
have a Material Adverse Effect.

8.             No consent,
approval, authorization, order, registration or qualification of or with any
court or governmental agency or body is required for the issuance and sale of
the Purchased Securities by the Company or for the consummation by the Company
Parties of the transactions contemplated by the Transaction Documents, except
in each case for such consents, approvals, authorizations, orders,
registrations or qualifications (i) as have been obtained, (ii) as may be
required under federal securities or state securities or Blue Sky laws in
connection with the purchase and distribution of the Purchased Securities, as
to which we express no opinion, [(iii) as may be required pursuant the statutes
and regulations of the Commonwealth of Kentucky and/or the State of Tennessee
relating to the licensing, transfer or operation of oil and/or gas wells, as to
which we express no opinion,] or (iv) the failure of which to obtain would not,
individually or in the aggregate, have a Material Adverse Effect.

9.             To our knowledge,
except as described on Schedule 3.1(z), there are no legal or governmental
proceedings pending or threatened against the Company Parties to which any
property of any of them is subject that would reasonably be expected to have a
Material Adverse Effect.

10.           To our knowledge,
except as provided in Schedule 3.1(k), there are no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into
or exercisable or exchangeable for, or any right to subscribe for or acquire,
any equity securities of any of the Operating Company or the Operating
Subsidiaries, or contracts or commitments by which the Operating Company or the
Operating Subsidiaries are bound to issue additional equity securities of any
of the Operating Company or the Operating Subsidiaries, or securities or rights
convertible or exchangeable into equity securities of any of the operating
Company or the Operating Subsidiaries, nor is there an restriction upon the
voting or transfer of any equity securities of any of the Operating Company or
the Operating Subsidiaries.

Exhibit B

REGISTRATION RIGHTS AGREEMENT

[Intentionally Omitted]

Exhibit C

COMPANY LLC AGREEMENT

[Intentionally Omitted]

Exhibit D

FINANCIAL STATEMENTS

[Intentionally Omitted]Exhibit 10.1

AGREEMENT OF PURCHASE AND SALE

between

AXSYS TECHNOLOGIES IR SYSTEMS, INC.,

Seller

and

THE HAMPSHIRE GENERATIONAL FUND LLC,

Purchaser

Premises:

24 Simon Street, Nashua, New Hampshire

 

 

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  1.

  	
   

  	
  Agreement to Sell and Purchase; Description of
  Property

  	
   

  	
  1

  
	
  2.

  	
   

  	
  Exceptions to Title; Title Matters

  	
   

  	
  2

  
	
  3.

  	
   

  	
  Purchase Price and Payment; Escrow Agent

  	
   

  	
  8

  
	
  4.

  	
   

  	
  Closing

  	
   

  	
  12

  
	
  5.

  	
   

  	
  As Is

  	
   

  	
  14

  
	
  6.

  	
   

  	
  Leaseback Provisions

  	
   

  	
  28

  
	
  7.

  	
   

  	
  Representations and Warranties of the Parties;
  Certain Covenants

  	
   

  	
  29

  
	
  8.

  	
   

  	
  Closing Deliveries

  	
   

  	
  34

  
	
  9.

  	
   

  	
  Limitation on Liability of Parties

  	
   

  	
  37

  
	
  10.

  	
   

  	
  Fire or Other Casualty

  	
   

  	
  39

  
	
  11.

  	
   

  	
  Condemnation

  	
   

  	
  43

  
	
  12.

  	
   

  	
  Brokerage

  	
   

  	
  45

  
	
  13.

  	
   

  	
  Closings Costs; Fees and Disbursements of Counsel,
  etc.

  	
   

  	
  45

  
	
  14.

  	
   

  	
  Notices

  	
   

  	
  46

  
	
  15.

  	
   

  	
  Survival; Governing Law

  	
   

  	
  49

  
	
  16.

  	
   

  	
  Counterparts; Captions

  	
   

  	
  49

  
	
  17.

  	
   

  	
  Entire Agreement; No Third Party Beneficiaries

  	
   

  	
  50

  
	
  18.

  	
   

  	
  Waivers; Extensions

  	
   

  	
  50

  
	
  19.

  	
   

  	
  No Recording

  	
   

  	
  51

  
	
  20.

  	
   

  	
  Assignments

  	
   

  	
  51

  
	
  21.

  	
   

  	
  Pronouns; Joint and Several Liability

  	
   

  	
  51

  
	
  22.

  	
   

  	
  Successors and Assigns

  	
   

  	
  52

  
	
  23.

  	
   

  	
  Cross Default

  	
   

  	
  52

  
	
  24.

  	
   

  	
  Like Kind Exchange

  	
   

  	
  54

  
	
  25.

  	
   

  	
  Further Assurances

  	
   

  	
  55

  
	
  26.

  	
   

  	
  Prohibited Persons and Transactions

  	
   

  	
  56

  

 

 i
 

 

EXHIBITS:

A.            Legal
Description

B.            Lease

C.            Form
of Deed

 ii

 

AGREEMENT OF PURCHASE AND SALE

THIS AGREEMENT OF PURCHASE AND SALE
(“Agreement”), made as of
March 15, 2007, by and between Axsys Technologies IR Systems, Inc., a New York
corporation, having an office at 24 Simon Street, Nashua, New Hampshire 03060 (“Seller”), and The Hampshire
Generational Fund LLC, a New Jersey limited liability company, having an office
at 15 Maple Avenue, Morristown, New Jersey 07960 (“Purchaser”).

W  I  T  N  E  S  S
E  T  H

1.                                       Agreement
to Sell and Purchase; Description of Property.

Seller agrees to sell and convey to Purchaser, and
Purchaser agrees to purchase from Seller, upon the terms and conditions
hereinafter contained, all right, title and interest of Seller in and to: (i)
that parcel of land
located at 23-24 Simon Avenue, in the City of Nashua, County of Hillsborough,
State of New Hampshire, the legal description of which is attached hereto as
Exhibit “A” (the “Land”); (ii) an industrial/office building, consisting of
approximately seventy-eight thousand square feet of space, constructed thereon
(the “Building”);  (iii) the
land lying in the bed of any street, highway, road or avenue, opened or
proposed, public or private, in front of or adjoining the Land, to the center
line thereof, and (iv) the fixtures and equipment attached to the Building and
used in the operation of the Building.

All of the above enumerated property, rights and
interests to be sold to Purchaser pursuant to this Agreement are hereinafter
sometimes collectively referred to as the “Property”.

2.                                       Exceptions
to Title; Title Matters.

2.1           Subject to the provisions of this
Section 2, Seller shall cause to be conveyed to Purchaser good and marketable
title to the Property, insurable at regular rates by a title insurance company
licensed to do business in the State of New Hampshire, subject only to the
following exceptions (the “Permitted Exceptions”):

2.1.1            All presently existing and future
liens for unpaid real estate taxes, municipal or governmental assessments,
water and sewer charges, and assessments, not due and payable as of the date of
the Closing.

2.1.2            All present and future zoning,
building, environmental, sanitary, fire, safety and other laws, ordinances,
codes, restrictions and regulations of all governmental and quasi-governmental
authorities having jurisdiction with respect to the Property, including,
without limitation, all zoning variances and special exceptions, if any
(collectively, “Laws and Regulations”).

 

2.1.3            Standard printed exclusions contained in an
A.L.T.A. Form B Owner’s Policy.

2.1.4            Such state of facts as are disclosed
on that certain ALTA/ASCM Title Survey Plan, dated August 9, 1995, revised
September 15, 1995 and further revised October 11, 1995, prepared by DuBois
& King, Inc. and as set forth in that certain New Hampshire Surveyor’s
Report & Certification, dated March 8, 2006, by DuBois & King, Inc.

2.1.5            Such items as are set forth in Items
8 — 15 in Schedule B-Part I of that certain First American Title Insurance
Company Owner’s Title Policy No. 103296073.

2.1.6            Any other matter not set forth above
in this Section 2.1 which Purchaser waives or is deemed to waive pursuant to
Section 2.2 hereof.

2.2           Promptly after the date of this
Agreement, Purchaser shall cause title to the Property to be examined by
General Land Abstract Co., Inc. (the “Title Company” or “Escrow Agent”), and
the Title Company shall deliver copies of its title report for the Property
(the “Title Report”) to Purchaser’s attorney. 
Purchaser agrees that on or before the “Diligence Termination Date” (as
hereinafter defined in Section 5.8), Purchaser or its attorney shall furnish to
Seller’s attorney a writing (the “Title Report Objection Notice”) specifying
any exceptions to title to the Property set forth in the Title Report which are
not Permitted Exceptions and “subject to” which Purchaser does not agree to
accept title.  Purchaser’s failure to
deliver the Title Report Objection Notice to Seller on or before 5:00 PM
Eastern Standard Time on the Diligence Termination Date, or to timely specify
any such exceptions to title in the Title Report Objection Notice, shall,
except with respect to the monetary liens described in the last sentence of
Section 2.3 (which, pursuant to the provisions of said sentence, are required
to be paid, discharged or removed of record), or requirements or exceptions
that are customarily removed from a final policy by a standard title affidavit,
constitute Purchaser’s irrevocable acceptance of the Title Report or of all
exceptions in the Title Report which it did not so timely specify, and
Purchaser shall be deemed to have unconditionally waived any right to object to
such matters.  If, after giving the Title
Report Objection Notice to Seller, Purchaser learns, through continuation
reports or other written evidence, of any title defect(s) which first affected
the Property subsequent to the date of the Title Report and which are not
Permitted Exceptions and “subject to” which Purchaser does not agree to accept
title, Purchaser shall give written notice thereof to Seller promptly after the
date Purchaser learns of same.  In the
event that the Title Company shall insure fee simple title to the Property, at
regular insurance rates, without additional exceptions to title other than
Permitted Exceptions or as otherwise permitted hereunder, Seller shall have
satisfied the requirements of this Agreement as to the state of title to the
Property.  In addition, in the event
Seller is able to supply Purchaser with a fee title insurance policy insuring
fee 

 2
 

simple title to the Property, at regular rates, without additional exceptions
to title other than Permitted Exceptions or as otherwise permitted hereunder,
whether issued by the Title Company or any other title insurance company
licensed to do business in the State of New Hampshire, Seller shall have
satisfied the requirements of this Agreement as to the state of title to the
Property; provided, however, that any such alternative title insurance company
is consented to by Purchaser’s counsel, which consent shall not be unreasonably
withheld, conditioned or delayed.  TIME IS
OF THE ESSENCE with respect to all time periods set forth in this Section 2.2.

2.3           Within fifteen (15) days of receipt
of the Title Objection Notice, or subsequent notice following a continuation
notice, Seller shall notify Purchaser either that (i) Seller will not cure the
title defects raised in the Title Objection Notice (or subsequent notice), or
(ii) Seller will use best efforts to cure the title defects raised in the Title
Objection Notice (or subsequent notice) in accordance with the provisions of this
Section 2.  Seller shall be entitled to
one (1) or more adjournments of the Closing, for a period not to exceed ninety
(90) days in the aggregate, to enable Seller to remove any non-conforming title
objections.  If Seller elects to adjourn
the Closing as provided above, this Agreement shall remain in effect for the
period or periods of adjournment, in accordance with its terms.  Seller shall not be required to take or bring
any action or proceeding or any other steps to remove any defect in or objection
to title or to expend any moneys therefor, nor shall Purchaser have any right
of action against Seller therefor, at law or in equity, except that Seller
shall, on or prior to the Closing, pay, discharge or remove of record or cause
to be paid, discharged or removed of record at Seller’s sole cost and expense
all consensual monetary liens, judgments and mechanic’s liens (other than
Permitted Exceptions) encumbering the Property, which are in liquidated amounts
and which may be satisfied by the payment of money (including the preparation
or filing of appropriate satisfaction instruments in connection
therewith).  If Seller notifies Purchaser
that Seller will not cure the title defects raised in the Title Objection Notice
(or subsequent notice) or if Seller is unable to remove any objections after
expiration of the foregoing adjournment period, Purchaser shall have the right
to terminate this Agreement by providing written notice thereof to Seller.  In the event this Agreement is terminated
pursuant to this Article 2, Purchaser shall be entitled to the return of the
Downpayment, together with interest thereon, and this Agreement shall be of no
further force and effect, except for provisions hereof which expressly survive
such termination.

2.4           Notwithstanding anything in Section
2.3 above to the contrary, Purchaser may at any time accept such title as
Seller can convey, without reduction of the Purchase Price (as hereinafter
defined) or any credit or allowance on account thereof or any claim against
Seller.  The acceptance of the Deed (as
hereinafter defined) by Purchaser shall be deemed to be full performance of,
and discharge of, every agreement and obligation on Seller’s part to be
performed under this Agreement, except for such matters which are expressly
stated in this Agreement to survive the Closing.

 3
 

 

2.5           If the Property shall, at the time of
the Closing, be subject to any liens such as for judgments or transfer,
inheritance, estate, franchise, license or other similar taxes or any
encumbrances or other title exceptions which Purchaser objected to, Seller
shall be deemed to satisfy Purchaser’s objection to title regarding such items
provided that, at the time of the Closing, Seller delivers certified or
official bank checks at the Closing in the amount required to satisfy the same
and delivers to Purchaser and/or the Title Company at the Closing instruments
in recordable form (and otherwise in form reasonably satisfactory to the Title
Company in order to omit the same as an exception to its title policy) sufficient
to satisfy and discharge of record such liens and encumbrances together with
the cost of recording or filing such instruments, provided that such recordable
discharges shall not be required from institutional mortgagees that have
provided payoff letters if the Title Company shall otherwise issue or bind
itself to issue a policy which shall omit such liens.

3.                                       Purchase
Price and Payment; Escrow Agent.

3.1           The purchase price payable by
Purchaser to Seller for the Property is SIX MILLION FOUR HUNDRED FIVE THOUSAND
AND 00/100 DOLLARS ($6,405,000.00) subject to such apportionments, adjustments
and credits as are provided herein (the “Purchase Price”).

3.2           The Purchase Price shall be payable
as follows:

3.2.1            Simultaneously with the execution
and delivery of this Agreement by Purchaser, ONE HUNDRED FIFTY THOUSAND AND
00/100 DOLLARS ($150,000.00) (the “Downpayment”), by federal funds wire
transfer or bank check drawn on a member bank of the New York Clearinghouse
Association, payable to the order of Escrow Agent.  The Downpayment shall be held by Escrow Agent
and disbursed in accordance with the terms and conditions of this
Agreement.  Any interest earned on the
Downpayment shall be deemed to be part of the Downpayment and shall be paid
together with the principal portion of the Downpayment, it being understood and
agreed that any interest earned on the Downpayment shall be credited against
the Purchase Price upon the Closing.

3.2.2            The balance of the Purchase Price
shall be paid to Seller on the date of the Closing, subject to the
apportionments, adjustments and credits as are provided herein, simultaneously
with the delivery of the Deed, by federal funds wire transfer of immediately
available funds to an account at such bank or banks as shall be designated by Seller
by written notice to Purchaser and Escrow Agent.

3.3           Whenever in this Agreement Purchaser
is entitled to a return of the Downpayment, Purchaser shall be entitled to the
return of the Downpayment, together with all interest earned thereon.  Whenever in this Agreement Seller is entitled
to retain 

 4
 

the Downpayment, Seller shall be entitled to the Downpayment, together
with all interest earned thereon.  The
Downpayment shall be held in an interest bearing account.

3.4           If for any reason the Closing does not
occur, the Escrow Agent shall deliver the Downpayment to Seller or Purchaser
only upon receipt of a written demand therefor from such party, subject to the
following provisions.  If for any reason
the Closing does not occur and either party makes written demand upon the
Escrow Agent for the payment of the Downpayment, the Escrow Agent shall give
written notice to the other party of such demand.  If the Escrow Agent does not receive a
written objection from the other party to the proposed payment within ten (10)
days after the giving of such notice, the Escrow Agent is hereby authorized to
make such payment.  If the Escrow Agent
does receive such written objection within such period, the Escrow Agent shall
continue to hold such amount until otherwise directed by written instructions
signed by Seller and Purchaser or a final judgment of a court.  The parties acknowledge that the Escrow Agent
is acting solely as a stakeholder at their request and for their convenience,
that the Escrow Agent shall not be deemed to be the agent of either of the
parties, and that the Escrow Agent shall not be liable to either of the parties
for any action or omission on its part taken or made in good faith, and not in
disregard of this Agreement, but shall be liable for its negligent acts.  Seller and Purchaser shall jointly and
severally indemnify and hold the Escrow Agent harmless from and against all
liabilities (including reasonable attorneys’ fees, expenses and disbursements)
incurred in connection with the performance of the Escrow Agent’s duties
hereunder, except with respect to actions or omissions taken or made by the
Escrow Agent in bad faith, in disregard of this Agreement or involving
negligence on the part of the Escrow Agent. 
Notwithstanding the foregoing, in the event Purchaser elects to
terminate this Agreement in accordance with Section 5.8 hereof, the Escrow
Agent shall promptly refund the Downpayment to Purchaser, without awaiting the
objection period set forth above, provided that Purchaser simultaneously deliver
written notice terminating this Agreement to both Seller and the Escrow Agent
on or before the Diligence Termination Date in accordance with Section 5.8
hereof.

3.5           The Escrow Agent is designated the “real
estate reporting person” for purposes of Section 6045 of Title 26 of the United
States Code and Treasury Regulation 1.6045-4 and any instruments or settlement
statement prepared by the Escrow Agent shall so provide.  Upon the consummation of the transaction
contemplated by this Agreement, the Escrow Agent shall file a Form 1099
information return and send the statement to Seller as required under the
above-referenced statute and regulation.

3.6           The Escrow Agent has executed this
Agreement in the place indicated on the signature page hereof in order to confirm
that the Escrow Agent shall hold the Downpayment in escrow and shall disburse
the Downpayment pursuant to the provisions hereof.

 5
 

 

3.7           Purchaser expressly agrees and
acknowledges that Purchaser’s obligations hereunder are not in any way
conditioned upon or qualified by Purchaser’s ability to obtain financing of any
type or nature whatsoever (i.e., whether by way of debt financing or equity
investment, or otherwise) or otherwise conditioned upon any other matter or
thing whatsoever not specifically provided for herein.

4.                                       Closing.

4.1           The closing of the transaction
contemplated hereby (the “Closing”) shall occur at 10:00 AM Eastern Standard
Time on the date that is not later than thirty (30) days following the
Diligence Termination Date on a Business Day, provided that the Closing shall
not occur until two (2) full business days after Seller and Purchaser have
delivered all closing documents to Escrow Agent, and all other conditions to
Closing have been satisfied or waived by Purchaser (such date, as the same may
be adjourned in accordance with the provisions of this Agreement being herein
referred to as the “Closing Date”).  The
term “Business Day” means any day of the year except a Saturday, Sunday or
legal holiday for banks in New York City. 
If the closing has not occurred as of the foregoing date, then either
party shall have the right to make time of the essence upon ten (10) days’
notice to the other party.  At the
Closing, Seller shall deliver possession of the Property to Purchaser, free and
clear of any tenancies or occupants, subject only to the Lease.

4.2           The Closing shall occur through an
escrow closing arrangement pursuant to escrow instructions delivered separately
by Seller and Purchaser or jointly by Seller and Purchaser to the Escrow Agent
on or before the Closing Date.  Seller
shall make its deliveries into escrow in accordance with Section 8.1 hereof and
such escrow instructions and Purchaser shall make its deliveries into escrow in
accordance with Section 8.2 hereof and such closing instructions.

4.3           Notwithstanding anything to the
contrary contained herein, Seller and Purchaser acknowledge and agree that the
Closing hereunder shall occur simultaneously with the closing under that
certain Agreement of Purchase and Sale, dated as of the date hereof, by and
between Speeding, LLC, as seller, and The Hampshire Generational Fund LLC, as
purchaser, for the purchase and sale of certain real property commonly known as
6717 Alabama Highway 157, Cullman, Alabama (the “Alabama Agreement”).  In the event the closing under the Alabama
Agreement is adjourned pursuant to its terms, the Closing Date hereunder shall
be similarly adjourned to allow for a simultaneous closing of the transactions
contemplated hereunder and the transactions contemplated under the Alabama
Agreement.

 6
 

 

5.                                       As
Is.

5.1           Purchaser is purchasing the Property
in its now existing condition (subject to normal wear and tear and loss or
damage by fire, other casualty and condemnation [to the extent provided
herein], between the date hereof and the Closing) “AS IS, WHERE IS, AND WITH
ALL FAULTS” with respect to all facts, circumstances, conditions and defects,
and Seller has no obligation to determine or correct any such facts,
circumstances, conditions or defects or to compensate Purchaser for same.  Seller has specifically bargained for the
assumption by Purchaser of all responsibility to investigate the Property, Laws
and Regulations, the state of title and all covenants, restrictions, rights,
easements and other agreements with respect thereto, facts that would be shown
by an accurate current survey or physical inspection of the Property,
compliance with Environmental Laws (as defined in Section 5.3 hereof), the
environmental condition of the Property, including the presence of Hazardous Materials
(as defined in Section 5.3 hereof), and violations of any of the foregoing, and
of all risk of adverse conditions and has structured the Purchase Price and
other terms of this Agreement in consideration thereof.  Purchaser hereby covenants and represents
that upon the expiration of the Diligence Period, Purchaser shall have either
(i) terminated this Agreement by notice to Seller pursuant to Section 5.8
hereof, or (ii) undertaken and completed all such investigations of the
Property, Laws and Regulations, the state of title and all covenants,
restrictions, rights, easements and other agreements with respect thereto,
facts that would be shown by an accurate current survey or physical inspection
of the Property, compliance with Environmental Laws, the environmental
condition of the Property, including the presence of Hazardous Materials, and
violations of any of the foregoing as Purchaser shall have deemed necessary or
appropriate under the circumstances as to the status thereof and based upon
same, Purchaser is and will be relying strictly and solely upon such
inspections and examinations and the advice and counsel of its own consultants,
agents, legal counsel and officers and Purchaser is and will be fully satisfied
that the Purchase Price is fair and adequate consideration for the
Property.  Except as is otherwise
expressly set forth in this Agreement to the contrary, Seller agrees to cause
the Building to be maintained between the date hereof and the Closing in at
least as good a condition as it was in as of the date hereof, normal wear and
tear and loss or damage by fire, other casualty and condemnation (to the extent
provided herein) excepted.

5.2           Seller hereby disclaims all
warranties of any kind or nature whatsoever (including warranties of habitability
and fitness for particular purposes), whether expressed or implied, including,
without limitation, warranties with respect to the Property.  Purchaser acknowledges that it is not relying
upon any representation of any kind or nature made by Seller, or of any broker,
or any of their respective direct or indirect members, partners, shareholders,
officers, directors, employees or agents (collectively, the “Seller Related
Parties”) with respect to the Property, and that, in fact,

 7

no such representations were made except as may be otherwise expressly
set forth in this Agreement.

5.3           Seller makes no warranty with respect
to: (i) the environmental condition of the Property, including, without
limitation, the presence of Hazardous Materials in the Building, or on, at,
above or beneath the Property (or any parcel or land in proximity thereto); or
(ii) compliance with or violations of any Environmental Laws.  The term “Hazardous Materials” shall mean (a)
those substances included within the definitions of any one or more of the
terms “hazardous materials”, “hazardous wastes”, “hazardous substances”, “industrial
wastes”, and “toxic pollutants”, as such terms are defined under the
Environmental Laws, or any of them, (b) petroleum and petroleum products,
including, without limitation, crude oil and any fractions thereof, (c) natural
gas, synthetic gas and any mixtures thereof, (d) asbestos, whether friable or
non-friable, (e) polychlorinated biphenyl (“PCBs”) or PCB containing materials
or fluids, (f) radon, (g) any other hazardous or radioactive substance,
material, pollutant, contaminant or waste, and (h) any other substance with
respect to which any Environmental Law (as hereinafter defined) or governmental
or quasi-governmental authority requires environmental investigation,
monitoring or remediation.  The term “Environmental
Laws” shall mean all federal, state and local laws, statutes, ordinances,
regulations and common law, now or hereafter in effect, including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. §§ 9601 et seq.), the Hazardous
Material Transportation Act, as amended (49 U.S.C. §§ 1801 et seq.), the
Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. §§
136 et seq.), the Resource Conservation and
Recovery Act, as amended (42 U.S. §§ 6901 et
seq.), the Toxic Substance Control Act, as amended (15 U.S.C. §§ 2601 et seq.), the Clean Air Act, as amended (42
U.S.C. §§ 7401 et seq.), the Federal Water
Pollution Control Act, as amended (33 U.S.C. §§ 1251 et seq.), the Occupational Safety and Health Act, as amended (29
U.S.C. §§ 651 et seq.), the Safe Drinking
Water Act, as amended (42 U.S.C. §§ 300f et seq.),
and the regulations promulgated thereunder, in each case as amended or
supplemented from time to time, including, without limitation, all applicable
judicial or administrative orders, applicable consent decrees and binding
judgments relating to the regulation and protection of human health, safety,
the environment and natural resources (including, without limitation, ambient
air, surface, water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation).

5.4           Purchaser shall rely solely upon
Purchaser’s own knowledge of the Property based on its investigation of the
Property and its own inspection of the Property in determining the Property’s
physical condition.  Seller hereby grants
to Purchaser the right to conduct an investigation of the physical condition
and state of repair of the Property, the operation thereof, zoning, building,
use, environmental, health, safety, Laws and Regulations, the state of title
and all covenants, restrictions, rights, easements and other agreements with
respect thereto, facts that would be shown by an accurate current

 8
 

survey or physical inspection of the Property, violations of any of the
foregoing, and any other matters affecting or relating to the Property as
Purchaser deems necessary (the “Diligence Review”).  As part of Purchaser’s Diligence Review,
Purchaser shall have right to undertake a phase I environmental assessment, as
that term is defined by the American Society for Testing and Materials (“ASTM”),
of the Property (a “Phase I”).  Purchaser
shall not have the right to conduct any intrusive soil, sediment, water,
groundwater or building material sampling (a “Phase II”) on, at, above or
beneath the Property except and to the extent (i) the Phase I reasonably
recommends such Phase II in connection with Recognized Environmental
Conditions, as that term is defined in the ASTM Standards E1527-05, at the
Property, and (ii) Seller approves in writing, at its sole discretion, such
Phase II.  Subject to the provisions of
Sections 5.5 and 5.6 hereof, Purchaser and Purchaser’s appropriate
representatives shall be afforded access to the Property, during normal
business hours and on reasonable advance written notice to Seller, for the
purpose of conducting the Diligence Review; provided, however, that neither
Purchaser nor Purchaser’s representatives shall unreasonably interfere with the
business operations of Seller, nor shall they cause any damage or make any
alterations to the Property.  Purchaser
agrees to indemnify, defend and hold harmless Seller from and against all loss,
expense (including reasonable counsel, consultant and expert fees), damage and
liability resulting from injury to persons or property caused by Purchaser, its
representatives, or their respective employees, agents or contractors, in the
conduct of such investigation.  Subject
to the provisions of Sections 5.5 and 5.6 hereof, on or before the date of this
Agreement, Seller has delivered to
Purchaser environmental and wetlands reports, if any; copies of any material
agreements affecting the Property; and copies of any notices from government
authorities alleging violations of Laws and Regulations.  Seller represents to Purchaser that, to the
best knowledge of Seller, Seller has delivered to Purchaser all such documents
in the possession and control of Seller as of the date of this Agreement.  For purposes of the preceding sentence, “to
the best knowledge of Seller” shall mean to the actual knowledge of Bill
Mather, Vice President of Operations of Seller, without any duty of inquiry or
investigation, other
than a reasonable review by such person of Seller’s files relating to the
Property which are maintained by or under the direction of such person.  In addition, during the Diligence Period,
subject to the provisions of Sections 5.5 and 5.6 hereof, Purchaser shall be
afforded access to all other material documents relating to the Property in the
possession and control of Seller (other than documents subject to the
attorney-client privilege), including, without limitation, all material
documents relating to the physical condition and state of repair of the
Property, the operation thereof, zoning, building, use, environmental, health,
safety, Laws and Regulations, the state of title and all covenants,
restrictions, rights, easements and other agreements with respect thereto,
facts that would be shown by an accurate current survey or physical inspection
of the Property, violations of any of the foregoing, reasonably requested by
Purchaser in connection with the Diligence Review, for inspection and copying,
at the location of such documents at the Property or at the offices of Seller’s
counsel, Cole, Schotz, Meisel, Forman & Leonard, P.A., during normal
business hours 

 9
 

and at a time reasonably convenient to Seller, upon not less than three
(3) Business Days prior written notice to Seller, specifying the category of
documents to be reviewed.  Seller
represents to Purchaser that Seller will provide Purchaser, to the best
knowledge of Seller, with access to all such documents in the possession and
control of Seller at the time Purchaser requests to review same.  For purposes of the preceding sentence, “to
the best knowledge of Seller” shall mean to the actual knowledge of Bill
Mather, Vice President of Operations of Seller, without any duty of inquiry or
investigation, other than a reasonable review by such person of Seller’s files
relating to the Property which are maintained by or under the direction of such
person.  All such documents shall be kept
in confidence pursuant to the provisions of Sections 5.5 and 5.6 hereof, and
not disclosed to any other party other than Purchaser’s consultants, lenders,
and investors (unless disclosure to such parties is prohibited by Federal Laws
(as hereinafter defined)), provided that such parties agree in writing to keep
same in confidence, or as required by law, and upon the termination of this
Agreement prior to Closing for any reason, Purchaser shall promptly return such
records without retaining any copies or electronic images thereof.  In addition, Seller shall make a management
employee of Seller with knowledge of the past and present operations at the
Property available to Purchaser for interview in connection with Purchaser’s
Diligence Review.  The provisions of this
Section 5.4 shall survive the termination of this Agreement or the Closing Date
and shall not be deemed to have merged into any of the documents executed or
delivered at the Closing.

5.5           Purchaser acknowledges that Seller
maintains Confidential Information (as hereinafter defined) at the
Property.  Purchaser agrees that in
entering the Property pursuant to this Section 5 or otherwise, Purchaser shall
comply with measures required by Seller to protect such Confidential
Information, including any limitations imposed by Seller with respect to access
to any portion of the Property pursuant to Section 5.6 hereof.  Purchaser agrees that Purchaser shall not
disclose to any third party any Confidential Information obtained by Purchaser,
except as otherwise permitted hereunder, whether obtained inadvertently or
otherwise.  For purposed hereof, “Confidential
Information” shall mean information in any manner relating to Seller, its
customers, contractors or permitted subtenants, or their respective affiliates,
or to Seller’s business operations, that is non-public, confidential or proprietary
in nature, including but not limited to financial statements, cost and expense
data, billing records, policies, databases, contracts, customers, suppliers,
alliances, trade secrets, proprietary information and processes, software,
software and technology architecture, “know-how” or production techniques,
networks, business methodologies and strategies, facilities and marketing and
customer data, together with all copies, reproductions, notes, memoranda,
analysis, data, reports, records, evaluations, compilations, forecasts,
studies, interpretations, summaries or other documents which contain or
otherwise reflect such information, regardless of whether or not such
information is specifically identified as “confidential”.  Notwithstanding the foregoing, the term “Confidential
Information” shall exclude any Confidential 

 10
 

Information to the extent that such Confidential Information (a) is or
becomes generally available to the public other than as a result of acts by
Purchaser or its consultants, employees, agents, contractors, directors,
officers, partners, attorneys, accountants or other representatives ( “Purchaser’s
Representatives”) in violation of this Agreement, or the acts of any other
person to whom Purchaser or Purchaser’s Representatives has disclosed the
Confidential Information; (b) is in the possession of Purchaser or Purchaser’s
Representatives prior to the disclosure by Seller; or (c) is disclosed to
Purchaser or Purchaser’s Representatives on a non-confidential basis by a
person other than Seller or its consultants, employees, agents, contractors,
directors, officers, partners, attorneys, accountants or other representatives,
unless, to the Purchaser’s actual knowledge, the person disclosing such
Confidential Information is restricted from disclosing same to Purchaser or
Purchaser’s Representatives by any contractual, fiduciary or other legal
obligations.  For purposes hereof, the
term “person” shall be construed broadly and shall include, without limitation,
any natural person, corporation, partnership, limited liability company, trust,
association or other entity.  The
provisions of this Section 5.5 shall survive the termination of this Agreement
or the Closing Date and shall not be deemed to have merged into any of the
documents executed or delivered at the Closing.

5.6           Purchaser acknowledges that it is
aware that the Property and the operations conducted therein are subject to
federal regulation, including without limitation, the Arms Export Control Act,
22 U.S.C. § 2778 et seq.; the International Traffic in Arms Regulations,
22 C.F.R. Parts 120-130; the Atomic Energy Act of 1954, 42 U.S.C. § 2011 et
seq.; the Nuclear Regulatory Commission Regulations, 10 C.F.R. § 1.1 et
seq.; and Executive Order 12829 (collectively, “Federal Laws”).  Purchaser further acknowledges that it is
aware that, notwithstanding any obligation of Seller pursuant to this Section 5
or any other section of this Agreement, Seller may be prohibited by Federal
Laws from disclosing to Purchaser and to any Purchaser’s Representatives
certain information deemed to be “restricted”, “classified”, “secret” or other
similarly described information, and Purchaser agrees to abide by all security
measures implemented by Seller to prevent disclosure of such “restricted”, “classified”,
“secret” or other similarly described information, including, but not limited
to, the escorting at all times of Purchaser and any of Purchaser’s
Representatives by an authorized representative of Seller through the Property
and the denial of access to Purchaser and any of Purchaser’s Representatives to
certain portions of the Premises deemed “restricted”, “classified”, “secret” or
otherwise restricted from public access pursuant to any Federal Laws.  Purchaser agrees that Purchaser and any of
Purchaser’s Representatives that Purchaser wishes to have access to the
Property shall be a “US Person” as that term is defined by Federal Law and that
Purchaser and any of Purchaser’s Representatives will present a validly issued
United States passport or validly issued United States green card identifying
such person as a “US Person” prior to entering the Property.

 11
 

 

5.7           In conducting any inspections or
tests in the course of the Diligence Review, neither Purchaser, nor Purchaser’s
consultants, employees, agents or contractors, shall cause any damage to the
Property.  Purchaser shall not make, nor
cause to be made, any borings, test pits, holes or excavations on the Property
without the prior written consent of Seller. 
Any such borings, test pits, holes and excavations, and any damage to
the Property caused by Purchaser, Purchaser’s representatives, and their
respective consultants, employees, agents and contractors, shall be promptly
filled or repaired, as the case may be, at Purchaser’s sole cost and
expense.  Prior to each entry upon the
Property by Purchaser, Purchaser’s representatives or their respective
consultants, employees, agents or contractors for purposes other than to
conduct a Phase II or to engage in other invasive activities at the Property,
Purchaser shall furnish or caused to be furnished to Seller by its agents or
contractors, and caused to be maintained and kept in effect without expense to
Seller, at all times that Purchaser, Purchaser’s representative or their
respective consultants, employees, agents or contractors are upon the Property,
insurance against claims for personal injury (including death) and property
damage, under (i) a policy or policies of general public liability insurance of
not less than One Million and 00/100 Dollars ($1,000,000.00) combined single
limit; and (ii) adequate worker’s compensation insurance to cover all workers
and others engaged on work on the Property (provided, however, that Seller need
not be named as an additional insured with respect to any such worker’s compensation
insurance).  Prior to each entry upon the
Property by Purchaser, Purchaser’s representatives or their respective
consultants, employees, agents or contractors for the purpose of conducting a
Phase II or engaging in other invasive activities at the Property, Purchaser
shall furnish or caused to be furnished to Seller by its agents or contractors,
and cause to be maintained and kept in effect without expense to Seller, at all
times that Purchaser, Purchaser’s representative or their respective consultants,
employees, agents or contractors are upon the Property, insurance against
claims for personal injury (including death) and property damage, under (i) a
policy or policies of general public liability insurance of not less than Two
Million and 00/100 Dollars ($2,000,000.00) combined single limit; (ii) adequate
worker’s compensation insurance to cover all workers and others engaged on work
on the Property (provided, however, that Seller need not be named as an
additional insured with respect to any such worker’s compensation insurance);
and (iii) contractor’s pollution liability insurance with policy limits of at
least Three Million and 00/100 Dollars ($3,000,000.00), issued on an occurrence
and not claims-made, basis.  Each policy
shall provide that it cannot be cancelled without at least ten (10) days prior
written notice to Seller, and shall be issued by a recognized responsible
insurance company licensed to do business in the date of New Hampshire.  Proof of payment of the premium of each
policy and each replacement policy shall also be delivered to Seller in the
form of an Acord certificate.

5.8           If Purchaser determines, in its sole
and absolute discretion, for any reason or no reason at all, that it is not
satisfied with the Property and/or any matters relating thereto, Purchaser
shall have the right to terminate this Agreement upon written notice 

 12
 

delivered to Seller and Escrow Agent on or before 5:00 p.m. Eastern
Standard Time on the thirtieth (30th) day after execution and delivery of
this Agreement by both parties (the “Diligence Termination Date”), such thirty
(30) day period being referred to as the “Diligence Period”).  In such event, (i) this Agreement shall
immediately terminate, (ii) the Escrow Agent shall deliver the Downpayment and
any interest earned thereon to Purchaser, (iii) any studies, surveys, test
results or reports prepared in connection with the Diligence Review, and all
copies thereof, shall be promptly furnished to Seller, (iv) any original
documents or copies of documents furnished by Seller to Purchaser shall be
promptly returned to Seller, and (v) each party shall be released from any
further liability to the other hereunder, except with respect to the provisions
hereof which expressly survive the termination of this Agreement.  If Purchaser does not deliver such written
notice of termination to Seller, for any cause or reason whatsoever, on or
before 5:00 p.m. Eastern Standard Time on the Diligence Termination Date, TIME
BEING OF THE ESSENCE, the contingency provided for herein shall be deemed
irrevocably waived by Purchaser. 
Purchaser’s failure to deliver written notice of termination to Escrow
Agent on or before 5:00 p.m. Eastern Standard Time on the Diligence Termination
Date shall not be deemed to be a waiver by Purchaser of the contingency
provided for herein, provided that such notice is timely delivered to Seller in
accordance with the provisions of this Section 5.8.  Notwithstanding the foregoing, Purchaser may,
at any time during the Diligence Period, notify Seller in writing that
Purchaser waives the balance of the Diligence Period, in which instance the
Diligence Period shall be deemed to expire as of the date of such notice.

6.             Leaseback Provisions.

6.1           At the Closing, Seller, as tenant,
and Purchaser, as landlord, shall enter into a lease (the “Lease”) of the
Property in the form attached hereto as Exhibit “B”.  There shall be no adjustment or apportionment
between Seller and Purchaser of real estate taxes, assessments, water charges
and sewer rents, or installments thereof, which are a lien on the
Property.  At the Closing, Seller have in
force all insurance policies required under the terms of the Lease and shall
deliver to Purchaser certificates evidencing such insurance.

7.             Representations and Warranties of the Parties;
Certain Covenants.

7.1           Seller, to the best of its knowledge,
warrants, represents and covenants to and with Purchaser that the following are
true and correct on the date hereof:

7.1.1            Seller is a corporation duly formed
and in good standing under the laws of the State of New York and has the
requisite power and authority to enter into and to perform the terms of this
Agreement.  The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all requisite action of Seller.  This Agreement constitutes, and each 

 13
 

document and instrument contemplated hereby to be executed and
delivered by Seller, when executed and delivered, shall constitute the legal,
valid and binding obligation of Seller enforceable against Seller in accordance
with its respective terms (subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights generally).

7.1.2            Seller is not a “foreign person”
within the meaning of Section 1445 of the Internal Revenue Code 1986, as
amended, or any regulations promulgated thereunder (collectively, the “Code”).

7.1.3            Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby:

(i)            will violate any injunction,
judgment, order, decree, ruling, charge, or other restriction of any federal, state, county or municipal
governmental agency, board, commission, officer, official or entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and having jurisdiction over Purchaser, Seller and the
Property (the “Governmental Authority”), or court to which Seller is
subject or any provision of the certificate of incorporation or by-laws of
Seller; and

(ii)           Seller does not need to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any Governmental Authority in order for the parties hereto to
consummate the transactions contemplated by this Agreement.

7.2           Purchaser warrants, represents and
covenants to and with Seller that the following are true and correct on the
date hereof:

7.2.1            Purchaser is a limited liability
company duly formed and in good standing under the laws of the State of New
Jersey.  The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all requisite action of Purchaser.  This Agreement constitutes, and each document
and instrument contemplated hereby to be executed and delivered by Purchaser,
when executed and delivered, shall constitute the legal, valid and binding
obligation of Purchaser enforceable against Purchaser in accordance with its
respective terms (subject to bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditor’s rights generally).

7.2.2            Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby:

(i)            will violate any injunction,
judgment, order, decree, ruling, charge, or other restriction of any Governmental Authority, or court to
which Purchaser is 

 14
 

subject or any provision of the certificate of formation or operating
agreement of Purchaser; and

(ii)           Purchaser does not need to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any Governmental Authority order for the parties hereto to
consummate the transactions contemplated by this Agreement.

7.3           Purchaser agrees and acknowledges
that, except as otherwise specifically set forth in this Agreement to the
contrary, neither Seller, any of the Seller Related Parties, any broker, agent,
or representative, nor any purported agent or representative of Seller or any
of the Seller Related Parties, have made, and neither Seller nor any of the
Seller Related Parties are liable for or bound in any manner by, any express or
implied warranties, guaranties, promises, statements, inducements,
representations or information pertaining to the Property or any part thereof.  Without limiting the generality of the
foregoing, Purchaser agrees and acknowledges that it has not relied on any
representations or warranties, express or implied, and that neither Seller, nor
the Seller Related Parties have made any representations or warranties, other
than as expressly set forth herein, as to (a) the current or future real estate
tax liabilities, assessments or valuations of the Property (including, without
limitation, the status of any real estate tax appeal or negotiations, Seller’s
intentions with respect thereto, or the eventual outcome thereof), (b) the
potential qualification of the Property for any and all benefits conferred by
Federal, state or municipal laws, whether for subsidies, special tax treatment,
insurance, mortgages, or any other benefits, whether similar or dissimilar to
those enumerated, (c) the compliance of the Property, in its current or any
future state, with applicable zoning ordinances and the ability to obtain a
change in the zoning or a variance with respect to the Property’s
noncompliance, if any, with said zoning ordinances, (d) the availability of any
financing for the acquisition, alteration, rehabilitation or operation of the
Property from any source, including, but not limited to, any state, city or
Federal government or any institutional or non-institutional lender, (e) the
current or future use of the Property, (f) the present or future structural and
physical condition of any of the improvements on the Land or their suitability
for rehabilitation or renovation, (g) the presence or absence of any violations
of any Laws and Regulations, or (h) the income, expenses, operation,
agreements, licenses, easements, instruments or documents of or in any way
affecting the Property.  Further,
Purchaser acknowledges and agrees that neither Seller nor any of the Seller
Related Parties are liable for or bound by (and Purchaser has not relied upon)
any oral or written statements, representations or any other information
respecting the Property furnished by Seller, any of the Seller Related Parties
or any broker, employee, agent, consultant or other person representing or
purportedly representing Seller or any of the Seller Related Parties.  The provisions of this Section 7.3 shall
survive the Closing.

 15
 

 

8.             Closing Deliveries.

8.1           At least two (2) Business Days prior
to the Closing, Seller shall deliver or cause to be delivered to Escrow Agent
the following:

8.1.1            a warranty deed, sufficient to
convey fee title to the Property subject to and in accordance with the
provisions of this Agreement, in the form attached hereto and made a part
hereof as Exhibit “C” (the “Deed”).

8.1.2            an original counterpart of the
Lease.

8.1.3            a check, in accordance with Section
13 hereof, in the amount of the documentary transfer taxes and transfer fees
due in connection with the consummation of the transaction contemplated by this
Agreement (the “Transfer Tax”).

8.1.4            an original counterpart of the
Declaration of Consideration, form CD-57, required to be executed and delivered
by Seller in connection with the payment of the Transfer Tax.

8.1.5            a certificate, duly executed and
acknowledged by Seller, in accordance with Section 1445 of the Code.

8.1.6            an affidavit of title in the form
reasonably required by the Title Company.

8.1.7            Seller’s (i) certificate of
incorporation and bylaws, (ii) good standing certificate dated not more than
fifteen (15) days prior to the Closing Date, and (iii) resolutions authorizing
the transaction contemplated herein, which documents shall be accompanied by a
certification signed by a secretary, assistant secretary, managing member, or
general partner, as the case may be, certifying that such copies are true,
complete and correct and that such documents have not be modified, terminated
or rescinded and remain in full force and effect.

8.1.8            an original counterpart of a closing
statement (the “Closing Statement”) setting forth, inter alia, the material monetary terms of the transaction
contemplated hereby.

8.1.9            an authorization and release to the
Escrow Agent, reasonably acceptable to Purchaser and the Escrow Agent,
regarding the disposition of the Downpayment.

8.1.10          Guaranty of Lease as executed by Axsys
Technologies, Inc.

 16
 

 

8.1.11          any other documents, instruments or
agreements reasonably necessary to effectuate the transaction contemplated by
this Agreement.

8.2           At least two (2) Business Days prior
to the Closing, Purchaser shall deliver or cause to be delivered to Escrow
Agent the following:

8.2.1            the balance of the Purchase Price
required pursuant to Section 3.2 hereof.

8.2.2            Purchaser’s (i) certificate of
formation, (ii) good standing certificate dated not more than fifteen (15) days
prior to the Closing Date, and (iii) resolutions authorizing the transaction
contemplated herein, which documents shall be accompanied by a certification
signed by a secretary, assistant secretary, managing member, or general
partner, as the case may be, certifying that such copies are true, complete and
correct and that such documents have not be modified, terminated or rescinded
and remain in full force and effect.

8.2.3            an original counterpart of the
Lease.

8.2.4            an original counterpart of the
Declaration of Consideration, form CD-57, required to be executed and delivered
by Purchaser in connection with the payment of the Transfer Tax and a Real
Estate Transfer Questionnaire, form PA-34, executed by Purchaser (collectively,
the “Transfer Tax Returns”).

8.2.5            an authorization and release to the
Escrow Agent, reasonably acceptable to Seller and the Escrow Agent, regarding
the disposition of the Downpayment.

8.2.6            an original counterpart of the
Closing Statement.

8.2.7            any other documents, instruments or
agreements reasonably necessary to effectuate the transaction contemplated by
this Agreement.

9.             Limitation on Liability of Parties.

9.1           Purchaser shall be in default
hereunder if (a) it fails to close on a closing date for which time was made to
be of the essence, or (b) it fails to perform a material covenant set forth in
this Agreement, and does not cure such failure within ten (10) business days
after receipt of notice thereof from Seller, and the Closing does not occur as
a result thereof (a “Purchaser’s Default”). 
In the event of a Purchaser’s Default, Seller’s sole and exclusive
remedy for the Purchaser’s Default shall be, and Seller shall be entitled, to
terminate this Agreement and receive and retain the Downpayment and any
interest earned thereon as and for full and complete liquidated and agreed
damages for Purchaser’s Default, and Purchaser shall be released from any
further liability to Seller

 17

hereunder as a result of such default, except with respect to the
provisions hereof which expressly survive the termination of this
Agreement.  SELLER AND PURCHASER AGREE
THAT IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES
WHICH SELLER MAY SUFFER UPON SUCH A PURCHASER DEFAULT AND THAT THE DOWNPAYMENT
AND ANY INTEREST EARNED THEREON, AS THE CASE MAY BE, REPRESENTS A REASONABLE
ESTIMATE OF THE TOTAL NET DETRIMENT THAT SELLER WOULD SUFFER UPON SUCH A
PURCHASER DEFAULT.  SUCH LIQUIDATED AND
AGREED DAMAGES ARE NOT INTENDED AS A FORFEITURE OR A PENALTY WITHIN THE MEANING
OF APPLICABLE LAW.

9.2           Seller shall be in default hereunder
if (a) it fails to close on a closing date for which time was made to be of the
essence, or (b) it fails to perform a material covenant set forth in this
Agreement, and does not cure such failure within ten (10) business days after
receipt of notice thereof from Purchaser, subject to the provisions of Section
2.3 hereof, and the Closing does not occur as a result thereof (a “Seller’s
Default”).  In the event of a Seller’s
Default, Purchaser’s sole and exclusive remedies shall be, and Purchaser shall
be entitled, to either (a) receive the Downpayment with the interest earned
thereon, if any, and receive from Seller reimbursement of all of its due
diligence and legal costs incurred in connection with this Agreement, which
costs shall not exceed Fifty Thousand and 00/100 Dollars ($50,000.00), upon
which Seller shall be released from any further liability to Purchaser hereunder
as a result of such default, except with respect to the provisions hereof which
expressly survive the termination of this Agreement or (b) seek specific
performance of Seller’s obligations hereunder, provided that if Seller
willfully defaults and deliberately takes action which deprives Purchaser of
its remedy of specific performance, Seller may recover damages not to exceed
One Hundred Fifty Thousand and 00/100 Dollars ($150,000.00).  In no event shall Seller, under any
circumstances, be liable to Purchaser for any other damages of any kind
whatsoever, except as specifically provided in this Section 9.2.

9.3           If any action or proceeding is
brought by either party to enforce this Agreement, then the prevailing party in
such action shall be entitled to recover its reasonable attorneys’ fees and
costs incurred in such action or proceeding.

10.           Fire or Other Casualty.  

10.1         Seller shall promptly notify Purchaser
of any fire or other casualty (a “Casualty”) occurring at the Property.  Within forty-five (45) days of the date of a
Casualty, Seller shall provide Purchaser with a written estimate (the “Repair
Estimate”), prepared by a reputable architect, engineer or contractor selected
by Seller, setting forth the cost to repair or restore the Property.  In the event the estimated cost to repair or
restore the Property exceeds One Million and 00/100 Dollars ($1,000,000.00),
then Seller and Purchaser shall each have the right to terminate this Agreement
upon written notice 

 18
 

delivered to the other party within ten (10) days of the date of the
Repair Estimate, TIME BEING OF THE ESSENCE. 
If this Agreement is terminated pursuant to any provision of this
Section 10, the Downpayment, together with any interest earned thereon, shall
be delivered to Purchaser and the parties shall have no further rights or
obligations with respect to this Agreement, except with respect to the
provisions hereof which expressly survive the termination of this
Agreement.  In the event of a Casualty,
the Closing Date shall be adjourned for a period of time sufficient to permit
the delivery of the Repair Estimate and the exercise of any right to terminate
this Agreement pursuant to this Section 10.1.

10.2         Seller shall also have the right to
terminate this Agreement in the event of a Casualty if, in Seller’s reasonable
judgment: (i) Seller determines that the amount of insurance proceeds (less
costs incurred by Seller, including reasonable attorneys fees and other
professional fees, in collecting such proceeds), together with the amount of
any applicable insurance deductible, would be insufficient to cover all costs
associated with the repair or restoration of the Property; (ii) Seller is
unable to determine that Seller may, as of right, under applicable zoning and
land use laws and regulations, repair or restore the Building to a complete
architectural unit of substantially the same size, condition and character as
the same existed immediately prior to the Casualty; or (iii) Seller is unable
to determine that Seller may, as of right, continue to use and occupy the
Property in the same manner and to the same extent as Seller used and occupied
the Property immediately prior to the Casualty. 
With respect to clause (i), Seller’s judgment shall be deemed reasonable
if based upon the written estimate of a reputable architect, engineer or
contractor selected by Seller.  With
respect to clauses (ii) and (iii), Seller’s judgment shall be deemed reasonable
if based upon the advice of a reputable attorney, architect or engineer.  The Closing Date shall be adjourned for a
period of thirty (30) days from the date of the Casualty to permit Seller make
the determinations set forth above; provided, however, that if Seller is unable
to make such determinations with such thirty (30) day period, Seller, upon notice
to Purchaser in each instance, shall be entitled to adjourn the Closing Date
for not more than two (2) additional thirty (30) day periods.

10.3         In the event of a Casualty and this
Agreement is not terminated as provided in Sections 10.1 and 10.2 hereof, the
Closing shall occur within thirty (30) days of the date Seller makes its
determination pursuant to Section 10.2 and there shall be no adjustment in the
Purchase Price.  Upon Closing, all
insurance proceeds shall be paid to Seller or delivered to the Insurance
Trustee (as defined in Section 10.4 of the Lease), as applicable, pursuant to
Section 10.4 of the Lease and Seller shall thereafter repair and restore the
Property in accordance with the provisions of Article 10 of the Lease.  In the event all insurance proceeds have not
been collected prior to Closing, Seller shall continue to have the right to
adjust, negotiate, compromise or contest all losses with the insurance
carrier(s) after the Closing Date, and Purchaser agrees to assign to Seller or
to the Insurance Trustee, as applicable, as of the Closing Date, all of
Purchaser’s interest in 

 19
 

all such insurance proceeds and to execute such documents as may be
required by the insurance carrier(s) to permit payment of the insurance
proceeds to Seller or to the Insurance Trustee, as applicable, in accordance
with Section 10.4 of the Lease.

10.4         In the event this Agreement is
terminated pursuant to this Section 10, Purchaser shall not be entitled to any
portion of the proceeds of insurance payable with respect to the Casualty, all
of which shall become the property of Seller, and Purchaser shall, at Seller’s
request, execute all requisite releases with respect to such insurance
proceeds.

11.           Condemnation.

11.1         In the event the entire Property shall
be taken or condemned for any public or quasi-public purpose by right of
eminent domain or by purchase in lieu thereof prior to Closing, this Agreement
shall automatically terminate.  In such
event, the Downpayment, together with any interest earned thereon, shall be delivered
to Purchaser and the parties shall have no further rights or obligations with
respect to this Agreement.

11.2         In the event only a portion of the
Property shall be taken or condemned for any public or quasi-public purpose by
right of eminent domain or by purchase in lieu thereof, or Seller receives a
notice from any governmental authority that such action is pending or
contemplated, Seller shall promptly notify Purchaser of same.  Purchaser or Seller shall have the right to
terminate this Agreement within thirty (30) days after receipt of such
notice.  If this Agreement is terminated
pursuant to this Section 11, the Downpayment, together with any interest earned
thereon, shall be delivered to Purchaser and the parties shall have no further
rights or obligations with respect to this Agreement, except with respect to
the provisions hereof which expressly survive the termination of this
Agreement.

11.3         In the event only a portion of the
Property shall be taken or condemned and this Agreement is not terminated as
provided in this Section 11, there shall be no adjustment of the Purchase
Price.  Upon Closing, all condemnation
award proceeds shall be paid to Seller or delivered to the Insurance Trustee,
as applicable, pursuant to Section 11.4 of the Lease and Seller shall
thereafter restore the Property in accordance with the provisions of Article 11
of the Lease.  In the event that the
condemnation award proceeds have not been finally determined or paid prior to
Closing, Seller shall continue to have the right to adjust, negotiate,
compromise or contest any claims with respect to the condemnation award after
the Closing Date, subject to the rights of Purchaser pursuant to the Lease, and
Purchaser agrees to assign to Seller or to the Insurance Trustee, as applicable,
as of the Closing Date, all of Purchaser’s interest in any such condemnation
award and to execute such documents as the condemning authority may require to
permit payment of the condemnation award proceeds to Seller or to the Insurance
Trustee pursuant to Section 11.4 of the Lease.

 20
 

11.4         In the event this Agreement is
terminated pursuant to this Section 11, Purchaser shall not be entitled to any
portion of the condemnation award payable with respect to the any taking or
condemnation, all of which shall become the property of Seller, and Purchaser
shall, at Seller’s request, execute all requisite releases with respect to such
condemnation award proceeds.

12.           Brokerage.

Purchaser and Seller each represent and warrant to the
other that it has not dealt with any broker, consultant, finder or like agent
who might be entitled to a commission or compensation on account of introducing
the parties hereto, the negotiation or execution of this Agreement or the
Lease, or the closing of the transactions contemplated hereby.  Purchaser and Seller each agree to indemnify
and hold the other harmless from and against all claims, losses, liabilities
and expenses (including, without limitation, reasonable attorneys’ fees and
disbursements) which may be asserted against, imposed upon or incurred by such
party by reason of any claim made by any broker, consultant, finder or like
agent, for commissions or other compensation as a result of a breach by the
indemnifying party of its representation and warranty in this Section 12.  The provisions of this Section 12 shall
survive the Closing or termination of this Agreement.

13.           Closings Costs; Fees and
Disbursements of Counsel, etc.

At the Closing, Seller shall pay the Transfer
Tax.  Seller and Purchaser shall each
execute and/or swear to the Transfer Tax Returns required in connection with
the Transfer Tax.  All such tax payments
shall be made payable directly to the order of the appropriate governmental
officer or the Title Company.  Except as
may be otherwise expressly provided to the contrary in this Agreement,
Purchaser shall pay (a) all charges for recording and/or filing the Deed and
(b) all title charges and survey costs, including, without limitation, the
premium on Purchaser’s title policy. 
Each of the parties hereto shall bear and pay the fees and disbursements
of its own counsel, accountants and other advisors in connection with the
negotiation and preparation of this Agreement and the Closing.  The provisions of this Section 13 shall
survive the Closing.

14.           Notices.

All notices, demands, requests, consents, approvals or
other communications (for the purposes of this Section individually referred to
as “Notice” and collectively referred to as “Notices”) required or permitted to
be given hereunder or which are given with respect to this Agreement, in order
to constitute effective notice to the other party, must be in writing and shall
only be deemed to have been given when (a) personally delivered with signed
delivery receipt obtained, (b) when transmitted by facsimile machine, if
followed by the giving of, pursuant to one of the other means set forth in this
Section 14 before the end of the first business day thereafter, a copy of such
Notice and printed 

 21
 

confirmation of
successful transmission of such Notice to the appropriate facsimile number of
the address listed below as obtained by the sender from the sender’s facsimile
machine, (c) upon receipt, when sent by prepaid nationally recognized and
reputable overnight courier or (d) upon receipt or refusal to accept delivery
if sent postage prepaid by registered or certified United States mail, return
receipt requested, in each case addressed as follows:

	
   

  	
  If to Seller, to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Axsys
  Technologies IR Systems, Inc.

  	
   

  
	
   

  	
  24 Simon Street

  	
   

  
	
   

  	
  Nashua, New Hampshire
  03060

  	
   

  
	
   

  	
  Attention:

  	
  Mr. Neil Tansey

  
	
   

  	
  Facsimile:

  	
  (603) 864-6450

  
	
   

  	
   

  	
   

  
	
   

  	
  with copies to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Axsys
  Technologies, Inc.

  	
   

  
	
   

  	
  175 Capital
  Boulevard, Suite 103

  	
   

  
	
   

  	
  Rocky Hill,
  Connecticut 06067

  	
   

  
	
   

  	
  Attn: Julie
  Oakes, Assistant Treasurer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  and

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Coles, Schotz,
  Meisel, Forman & Leonard, P.A.

  	
   

  
	
   

  	
  Court Plaza
  North

  	
   

  
	
   

  	
  25 Main Street

  	
   

  
	
   

  	
  Hackensack, New
  Jersey 07601

  	
   

  
	
   

  	
  Attention:

  	
  Michael Sternlieb, Esq.

  
	
   

  	
  Facsimile:

  	
  (201) 678-6223

  
	
   

  	
   

  	
   

  
	
   

  	
  If to Purchaser,
  to:

  	
   

  
	
   

  	
  The Hampshire
  Generational Fund LLC

  	
   

  
	
   

  	
  15 Maple Avenue

  	
   

  
	
   

  	
  Morristown, New
  Jersey 07960

  	
   

  
	
   

  	
  Attention:

  	
  Mark S. Rosen, Esq.

  
	
   

  	
  Facsimile:

  	
  (973) 285-9643

  
	
   

  	
  with a copy to:

  	
   

  
						

 

 22
 

 

	
   

  	
  Duane Morris LLP

  	
   

  
	
   

  	
  744 Broad
  Street, Suite 1200

  	
   

  
	
   

  	
  Newark, New
  Jersey 07102

  	
   

  
	
   

  	
  Attention:

  	
  Stephen A. Urban, Esq.

  
	
   

  	
  Facsimile:

  	
  (973) 424-2057

  
	
   

  	
   

  	
   

  
	
   

  	
  If to Escrow
  Agent, to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  General Land
  Abstract Co., Inc.

  	
   

  
	
   

  	
  2 Research Way

  	
   

  
	
   

  	
  Princeton, New
  Jersey 08540

  	
   

  
	
   

  	
  Attention:

  	
  David B. Grodnick, Esq.

  
	
   

  	
  Facsimile:

  	
  (609) 951-0044

  
					

 

Notices shall be valid only if given in the manner
provided above.

15.           Survival; Governing Law.

Except as otherwise expressly set forth in this
Agreement, the provisions of this Agreement shall not survive the Closing
provided for herein.  This Agreement
shall be governed by, interpreted under, and construed and enforced in
accordance with, the laws of the State of New Hampshire.

16.           Counterparts; Captions.

This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which,
together, shall constitute one and the same instrument.  The captions in this Agreement are for
convenience of reference only and shall not affect the construction to be given
any of the provisions hereof.

17.           Entire Agreement; No Third Party
Beneficiaries.

This Agreement (including all exhibits annexed hereto)
contains the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior understandings, if any, with respect
thereto.  This Agreement may not be
modified, changed, supplemented or terminated, nor may any obligations
hereunder be waived, except by written instrument signed by the party to be
charged or by its agent duly authorized in writing.  The parties do not intend to confer any
benefit hereunder on any person, firm or corporation other than the parties
hereto.  The provisions of this Section
17 shall survive the Closing.

 23
 

18.           Waivers; Extensions.

No waiver of any breach of any agreement or provision
herein contained shall be deemed a waiver of any preceding or succeeding breach
thereof or of any other agreement or provision herein contained.  No extension of time for performance of any
obligations or acts shall be deemed an extension of the time for performance of
any other obligations or acts.

19.           No Recording.

The parties hereto agree that neither this Agreement
nor any memorandum or notice hereof shall be recorded.  Any recordation or attempted recordation by
Purchaser shall constitute a Purchaser’s Default.

20.           Assignments.  

Purchaser shall neither transfer or assign its rights
nor delegate its obligations hereunder without obtaining Seller’s prior written
consent, which consent may be granted or withheld in Seller’s sole and absolute
discretion.  Notwithstanding the
foregoing, Purchaser may assign this Agreement without Seller’s consent to an
entity controlled by Purchaser or another affiliate of The Hampshire
Companies.  No such assignment shall
relieve Purchaser from its obligations hereunder.

21.           Pronouns; Joint and Several
Liability.

All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as
the identity of the parties may require. 
If Purchaser consists of two or more parties, the liability of such
parties shall be joint and several.

22.           Successors and Assigns.

This Agreement shall bind and inure to the benefit of
Seller, Purchaser and their respective permitted successors and assigns.

23.           Cross Default.  Seller and Purchaser acknowledge that
Speedring, LLC, an affiliate of Seller, and Purchaser are parties to the
Alabama Agreement.  Seller and Purchaser
hereby agree as follows:

(i)            if Speedring, LLC commits a Seller’s
Default (as defined in the Alabama Agreement) under the Alabama Agreement, such
default shall be deemed a Seller’s Default hereunder for which Purchaser shall
be entitled to all of its rights and remedies as provided in herein for a
Seller’s Default.  If Seller commits a
Seller’s Default hereunder, such default shall be deemed a Seller’s Default by
Speedring, LLC under the 

 24
 

Alabama Agreement for which Purchaser shall be entitled to all of its
rights and remedies as provided for in the Alabama Agreement for a Seller’s
Default.

(ii)           if Purchaser commits a Purchaser’s
Default (as defined in the Alabama Agreement) under the Alabama Agreement, such
default shall be deemed a Purchaser’s Default hereunder for which Seller shall
be entitled to all of its rights and remedies as provided for herein for a
Purchaser’s Default, including, without limitation, the retention of the
Downpayment as provided herein.  If
Purchaser commits a Purchaser’s Default hereunder, such default shall be deemed
a Purchaser’s Default by Purchaser under the Alabama Agreement for which
Speedring, LLC shall be entitled to all of its rights and remedies as provided
for in the Alabama Agreement for a Purchaser’s Default, including, without
limitation, the retention of the Downpayment (as defined in the Alabama
Agreement).

(iii)          If Purchaser assigns its interest in
this Agreement in accordance with the provisions of Section 20 hereof, a
default committed by Purchaser’s assignee hereunder shall be deemed a Purchaser’s
Default under this Agreement and under the Alabama Agreement for which Seller
and Speedring, LLC shall be entitled to all of their respective rights and
remedies in accordance with this Section 23. 
If Purchaser assigns its interest in the Alabama Agreement pursuant to
Section 20 thereof, a default committed by Purchaser’s assignee thereunder
shall be deemed a Purchaser’s Default under the Alabama Agreement and under
this Agreement for which Speedring, LLC and Seller shall be entitled to all of
their respective rights and remedies in accordance with this Section 23.

(iv)          If this Agreement is terminated by
either party pursuant to its terms, then the Alabama Agreement shall terminate
simultaneously with the termination of this Agreement.  If the Alabama Agreement is terminated by
either party pursuant to its terms, then this Agreement shall terminate
simultaneously with the termination of the Alabama Agreement.

24.           Like Kind Exchange.

24.1         If so requested by either party (the “Requesting
Party”), the other party (the “Other Party”) shall cooperate in structuring and
completing this transaction for the Requesting Party so as to effect a “like
kind exchange” (an “Exchange”) pursuant to Section 1031 of the Internal Revenue
Code of 1986, as amended (the “Code”) and Revenue Procedure 2000-37.  The Other Party shall execute any and all
documents and/or agreements and take such other actions reasonably requested by
the Requesting Party which are, in the reasonable judgment of the Requesting
Party, necessary to effectuate the Exchange, provided, however, that Purchaser
shall not be required to accept title to any other property other than the
Property.  Not in limitation of the
foregoing, the Other Party shall, within fifteen (15) days following a request
by the 

 25
 

Requesting Party, consent in writing to the assignment by the
Requesting Party of the Requesting Party’s rights under this Agreement with
respect to the transfer of the Property to a qualified intermediary prior to
the Closing hereunder.  Notwithstanding
the foregoing, each and every obligation of the Requesting Party under this
Section 24.1 shall be conditioned on the following:

24.1.1          The Requesting Party shall bear, and be
responsible for, any and all costs incurred or liabilities sustained by the
Other Party, both prior to and after the Closing, which are directly or
indirectly attributable to the Exchange or any attempt to effect the Exchange,
including, without limitation, reasonable attorneys’ fees and costs, and any
and all realty transfer fees;

24.1.2          The Exchange, and the Other Party’s obligations
hereunder, shall not, in the reasonable opinion of the attorneys, accountants
and other professional advisors of the Other Party, subject the Other Party,
directly or indirectly, to any crime, offense, penalty, fine or punitive
damages; and

24.1.3          The Exchange shall not delay the Closing.

25.           Further Assurances.

The parties each agree to do such other and further
acts and things, and to execute and deliver such instruments and documents (not
creating any obligations additional to those otherwise imposed by this
Agreement) as either may reasonably request from time to time, whether at or
after the Closing, in furtherance of the purposes of this Agreement.

26.           Prohibited Persons and
Transactions.

Purchaser and Seller, to its respective knowledge,
each represents and warrants to the other that (i) neither it nor any of its
affiliates, nor any of their respective partners, members, shareholders or
other equity owners owning a 10% or greater interest in it, and none of their
respective employees, officers, directors, representatives or agents is, nor
will they become, a person or entity with whom U.S. persons or entities are restricted
from doing business under regulations of the Office of Foreign Asset Control (“OFAC”)
of the Department of the Treasury (including those named on OFAC’s Specially
Designated and Blocked Persons List) or under any statute, executive order
(including the September 24, 2001, Executive Order Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or
Support Terrorism), or other governmental action and has not and will not
assign or otherwise transfer this Agreement, or any interest herein to,
contract with or otherwise engage in any dealings or transactions or be
otherwise associated with such persons or entities, (ii) neither Purchaser or
Seller nor any respective affiliate 

 26
 

is knowingly engaged in,
and shall not knowingly engage in, any dealings or transactions or knowingly be
otherwise associated with such persons or entities described in (i) above,
(iii) neither Purchaser or Seller nor any respective affiliate is a person or
entity whose activities violate the International Money Laundering Abatement
and Financial Anti-Terrorism Act of 2001 or the regulations or orders
thereunder, (iv) none of the funds or other assets of Purchaser or Seller
constitute property of, or are beneficially owned, directly or indirectly, by
any Embargoed Person (as hereinafter defined), (v) no Embargoed Person has any
interest of any nature whatsoever in Purchaser or Seller (whether directly or
indirectly), and (vi) none of the funds of Purchaser or Seller have been
derived from any unlawful activity with the result that the investment in
Purchaser or Seller is prohibited by law or this Agreement is in violation of
law.

As used herein, the term “Embargoed Person” means any
person, entity or government subject to trade restrictions under U.S. law,
including but not limited to, the International Emergency Economic Powers Act,
50 U.S.C. § - 1701 et seq., The Trading
with the Enemy Act, 50 U.S.C. App. 1 et seq.,
and any Executive Orders or regulations promulgated thereunder with the result
that the investment in Purchaser or Seller is prohibited by law or Purchaser or
Seller is in violation of law.

[SIGNATURE PAGE FOLLOWS]

 27
 

IN WITNESS WHEREOF,
the parties have duly executed this Agreement as of the day and year first
above written.

	
  

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  AXSYS TECHNOLOGIES IR SYSTEMS, INC., a

  New York corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DAVID A.
  ALMEIDA

  	
   

  
	
   

  	
  Name:

  	
  David Almeida

  
	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PURCHASER:

  
	
   

  	
   

  
	
   

  	
  THE HAMPSHIRE GENERATIONAL FUND LLC, a

  New Jersey limited liability company

  
	
   

  	
   

  
	
   

  	
  By: Hampshire Partners II, LLC, its manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROBERT T.
  SMITH

  	
   

  
	
   

  	
  Name: 

  	
  Robert T. Schmitt

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
  ESCROW
  AGENT:

  	
   

  
	
   

  	
   

  
	
  SOLELY FOR THE
  PURPOSES OF

  	
   

  
	
  CONFIRMING THE
  PROVISIONS OF

  	
   

  
	
  SECTION 3:

  	
   

  
	
   

  	
   

  
	
  General Land
  Abstract Co., Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ DAVID B.
  GRODNICK

  	
   

  	
   

  
	
   

  	
  David B. Grodnick, Esq.

  	
   

  
	
   

  	
  Senior Vice President

  	
   

  
							

 

 

 28

 

 

 

EXHIBIT A

 

 A-1

 

 

 

EXHIBIT B

LEASE AGREEMENT

 

 B-1

 

 

 

EXHIBIT C

FORM OF DEED

 

 C-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}]]